Which of the following statements concerning tax credits is true?

Question

Quizplus · Accepted Answer

Tax credits provide a dollar-for-dollar reduction in the amount of tax owed, while tax deductions only reduce the taxpayer's taxable income. Therefore, tax credits are generally more beneficial than tax deductions. The tax benefit received from a credit may still depend on the taxpayer's marginal tax rate, but this is not unique to tax credits. Refundable tax credits may exceed a taxpayer's gross tax liability and result in a refund, so statement B is incorrect.

Which of the Following Statements Concerning Tax Credits Is True