FREE AFTR Tax Credits Questions and Answers

Question 1

What is a tax credit?

Accepted Answer

A reduction in the amount of taxes owed

Answer

A deduction from taxable income

Answer

A refund given automatically

Answer

An increase in taxable income

Question 2

Which of the following is a refundable tax credit?

Accepted Answer

Earned Income Tax Credit (EITC)

Answer

Mortgage Interest Credit

Answer

Child and Dependent Care Credit

Answer

Adoption Credit

Question 3

Which tax credit is specifically designed to assist parents with the cost of raising children?

Accepted Answer

Child Tax Credit

Answer

Lifetime Learning Credit

Answer

American Opportunity Credit

Answer

Foreign Tax Credit

Question 4

What is the purpose of the Lifetime Learning Credit?

Accepted Answer

To offset the costs of postsecondary education

Answer

To provide benefits for dependent care expenses

Answer

To encourage retirement savings

Answer

To reduce home mortgage interest

Question 5

Which of the following is a nonrefundable tax credit?

Accepted Answer

Foreign Tax Credit

Answer

Earned Income Tax Credit

Answer

Premium Tax Credit

Answer

Additional Child Tax Credit