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Which of the following credits can result in a refund even if the individual had no income tax liability?
“Refundable” tax credits are allowable in excess of a taxpayer’s tax obligation and may result in a refund. Among the possible answers, only the earned income credit is “refundable.” While the other answers may result in reducing a tax obligation to zero, they may not be taken in excess of this to result in a tax refund in a given year.
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How may taxes paid by an individual to a foreign country be treated?
Generally speaking, taxes paid to foreign entities result in a dollar-for-dollar reduction in the US tax obligation (a credit), rather than a reduction of taxable income (a deduction).
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Ron and Leslie have two children, ages 7 and 9. Both children meet the definition of qualifying child. The family has adjusted gross income of $325,000. What is the amount of the child tax credit on the couple’s income tax return?
The child tax credit is worth up to $2,000 for children classified as dependents who are under age 17 as of the last day of the tax year. The credit phases out starting at $200,000 for single filers, and $400,000 for joint filers.
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Of the following, which credit can result in a refund even if the individual had no income tax liability?
The earned income credit is refundable. Eligible taxpayers can get advance payments from their employers because the credit is assured.
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How many taxes paid by an individual to a foreign country be treated?
A taxpayer may claim a credit against federal income taxes due for foreign income taxes paid to a foreign country or a US possession. There is a limitation on the amount of the credit an individual can obtain.
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Of the following, which is a valid tax credit in the United States under the IRS?
Only the Earned income credit is a real credit. The others are made up of credits.
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