Answer:
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A nonrefundable tax credit reduce the amount of taxes owed as it can reduce the amount of tax owed to zero, but it can’t result in a refund.
<u>Option: A</u>
<u>Explanation:</u>
A tax credit which would only reduce the debt of a taxpayer to zero is understood as a non-refundable tax credit. The money left from the loan would be immediately relinquished by the taxpayer and does not produce a tax refund if the future loan raises the taxable income like a refundable loan would. Often, a non-refundable benefit may be called a wastable tax credit, that can be compared with refundable tax credits.
An individual taxpayer with both refundable and non-refundable tax credits, if he estimates his or her non-refundable credits before implementing his eligible refundable credits, will increase his overall credit value. Secondly, non-refundable tax deductions can be used to reduce the taxes owed.
