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Retirement tax questions
One thing that is common overlooked is that this is a nonrefundable credit, meaning that it cannot be used to reduce tax liability below zero. Perhaps your daughter's income tax liability on Form 1040 line 18 minus line 19 is already zero without this credit. This credit cannot be used to reduce other taxes such as self-employment tax and early-distribution penalties.
ā€ˇFebruary 3, 2021
8:07 AM