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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.

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.

When you take time to engage in tax planning, you can save yourself money you would otherwise pay to the government in taxes.

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True

False

True. When you take the time to engage in tax planning, you can save yourself money you would otherwise pay to the government in taxes.

Several different tax forms that get sent to you will list the income you received during the year. Which of the following does NOT list income that you received?

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W-4

W-2

1099

All of the above list income received

W-4. Your W-4 does not list income you received. But your W-2s and any 1099s you receive will.

The federal tax rate you pay will vary depending on your age.

Choose wisely. There is only one correct answer.

True

False

False. It varies depending on your filing status.

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