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Which of the following is true regarding tax credits?

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A tax credit reduces your taxable income as reported on Form 1040.

A tax credit reduces the actual tax you owe.

For most taxpayers, the standard tax credit will be larger and more valuable than itemizing your credits.

A tax credit reduces the actual tax you owe. Within limits, a dollar of credit reduces your tax by a dollar.

What is the name of the United States' tax collection agency?

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The federal government

The Internal Revenue Service

The State Department

The Treasury

The Internal Revenue Service. The Internal Revenue Service is the agency that collects taxes for the United States.

The various income tax filing statuses include _______.

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Married filing separately

Head of household

Single

All of the above

All of the above. There are several statuses that determine your rate.

Retired workers receive more in benefits from Social Security than they contributed to it during their working years.

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True

False

True. They receive more; this is a big advantage during one's retirement years.

How do IRAs, 401k plans, health savings accounts and flexible spending accounts help lower your income taxes?

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You get to deduct the money you contribute to them from your income.

Participating in one of these plans means you don't have to pay any taxes at all.

They don't actually help lower your income taxes.

You get to deduct the money you contribute to them from your income. When you deduct the contributions you make to them, there is less money for you to be taxed on.

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