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Lets assume your marginal tax rate is 24% and you claim the standard deduction because you do not have enough itemized deduc

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Answer #1

A:- $1000 Refundable tax credits : $1000

Refundable tax credits can be used at full to reduce tax liability and balance credits after seeing off with tax liability if any remains will be refunded by internal revenue department to tax payer.

B:- $1000 Nonrefundable tax credits : $1000

Refundable tax credit can be used at full to reduce tax liability and balance credits after seeing off with tax liability if any remains will not be refunded by internal revenue department to tax payer.

C:-. $1000 FOR AGI deduction : $240

For AGI Deduction are above the line deductions which are reduce from gross income to arrive at adjusted total income , since tax payer falls in 24% marginal tax bracket it will reduce the tax liability by 24% of total For AGI Deduction .I.e. $240 ( Assuming 24% income tax rate)

D:- $1000 from AGI Deduction : NIL

From AGI Deduction are below the line deductions which is standard deduction or itemized deduction which ever is higher, but in our questions since the tax payer opt for standard deduction so there will no reduction in tax liability due to $1000 itemized deduction.

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