Deductions and Credits Flashcards
7 cards from real IRS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Deductions and Credits flashcards as text
Which of the following is a refundable tax credit?
Answer: Earned Income Tax Credit
The Earned Income Tax Credit is fully refundable, meaning it can reduce tax liability below zero and result in a refund.
What is the maximum amount of student loan interest a taxpayer may deduct per year?
Answer: $2,500
Taxpayers may deduct up to $2,500 in student loan interest paid during the year, subject to income phase-outs.
The American Opportunity Tax Credit provides up to how much per eligible student per year?
Answer: $2,500
The AOTC provides up to $2,500 per student for qualified education expenses in the first four years of higher education.
For the home office deduction simplified method, what is the deduction per square foot?
Answer: $5
The simplified method allows a $5 per square foot deduction for up to 300 square feet of home office space.
Which of the following expenses qualifies as a miscellaneous itemized deduction under current law?
Answer: Gambling losses to the extent of gambling winnings
The TCJA suspended most miscellaneous itemized deductions; gambling losses offset against winnings remain deductible.
A self-employed taxpayer pays $6,000 in health insurance premiums. Where is this deduction claimed?
Answer: Form 1040 as an above-the-line deduction
Self-employed health insurance premiums are an above-the-line deduction on Form 1040, reducing AGI.
The Lifetime Learning Credit is worth what percentage of qualified education expenses?
Answer: 20%
The Lifetime Learning Credit equals 20% of up to $10,000 in qualified education expenses, for a maximum of $2,000.