Tax Credits and Deductions Flashcards
6 cards from real CTA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Tax Credits and Deductions flashcards as text
The Earned Income Tax Credit (EITC) is available to taxpayers who:
Answer: Have earned income below certain thresholds and meet other eligibility requirements
The EITC is a refundable credit available to low-to-moderate income workers with earned income and investment income below specified limits.
Which of the following credits directly reduces the tax liability dollar-for-dollar?
Answer: Tax credit
A tax credit reduces the actual tax liability dollar-for-dollar, making it more valuable than a deduction of the same amount.
The American Opportunity Tax Credit (AOTC) provides a maximum credit of how much per eligible student?
Answer: $2,500
The AOTC provides a maximum credit of $2,500 per eligible student for the first four years of post-secondary education.
Which deduction allows taxpayers to deduct up to $300 ($600 MFJ) for charitable contributions without itemizing?
Answer: Above-the-line charitable deduction for cash contributions
A temporary above-the-line deduction allowed non-itemizers to deduct cash charitable contributions, though its permanent status has varied by year.
The Child and Dependent Care Credit provides a credit based on what percentage of qualifying expenses?
Answer: 20-35% depending on AGI
The Child and Dependent Care Credit is 20-35% of qualifying expenses up to $3,000 for one qualifying person, with the percentage decreasing as AGI increases.
Home mortgage interest is deductible on a taxpayer's primary and secondary residence on debt up to what limit (post-2017)?
Answer: $750,000
Under the TCJA, mortgage interest deductibility is limited to acquisition debt of up to $750,000 for loans taken after December 15, 2017.