Chapter 11: Additional Child Tax Credit & EITC

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True

Child Tax Credit can reduce the taxpayer's tax liability to $0.

False

Child Tax Credit is refundable.

False

Due Diligence for ACTC means fulfilling three requirements: 1) Complete and keep copies of all worksheets used to compute the credits, 2) Satisfy the knowledge requirement, 3) Satisfy the documentation requirement.

True

For the purpose of determining Additional Child Tax Credit, nontaxable combat pay is considered earned income.

True

Investment Income Limitation for EITC includes Interest from Tax Exempt Investments.

True

Investment Income Limitation for EITC includes income from passive income.

True

Investment Income Limitation for EITC includes rental income

True

Nontaxable Combat Pay, reported in W-2, box 12, code Q, is treated as Earned Income to qualify for EITC

True

Taxable Disability Benefits from employer's disability retirement plan is treated as earned income to qualify for EITC.

False

There is a $500 penalty against the preparer for failure to meet the due diligence requirements for each of EITC, AOTC, CTC/ACTC, on each return.

True

A taxpayer with at least one qualifying child may claim up to 15% of the amount by which earned income exceeds $3000.

False

A taxpayer with more than 3 or more qualifying children and has a total of social security and medicare tax withholding that exceeds their Earned Income may be able to claim Additional Child Tax Credit higher than than the $1000 per child limit.

False

Additional Child Tax Credit is a nonrefundable credit.

True

Additional Child Tax Credit is a refundable credit.

False

Additional Child Tax Credit is worth up to $2000 per child for 2017 tax year.

True

Additional Child Tax Credit may increase the taxpayer's refund.

False

Additional Child Tax Credit may reduce taxable income.

True

To calculate Additional Child Tax Credit, no worksheet is required.

True

To claim ACTC, Form 8867 must be, not only filled out, but submitted along with your tax return.

False

To claim Additional Child Tax Credit, you must have at least 3 qualifying children.

True

You can leave some questions blank on Form 8867.


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