Tax credits reduce your adjusted gross income dollar-for-dollar. To compute the tax savings multiply the tax credit by the marginal tax rate.

Name: Tax credits reduce your adjusted gross income dollar-for-dollar. To compute the tax savings multiply the tax credit by the marginal tax rate.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Tax credits directly reduce the amount of tax owed, not the adjusted gross income. Tax deductions reduce the adjusted gross income.

Tax Credits Reduce Your Adjusted Gross Income Dollar-For-Dollar