Question

Which of the following are tax credits that reduce the tax liability calculated on taxable income?
1- Charitable credit.
2- Child tax credit.
3- Earned income credit.
4- A retirement savers credit.

Group of answer choices

1, 2 and 3.

2 and 3.

2, 3 and 4.

1, 2, 3 and 4.

Answer 1

Ans: Tax credits are generally better than deductions for the taxpayer since they reduce the tax liability directly,Tax credits directly reduce the amount of tax you owe, giving you a dollar-for-dollar reduction of your tax liability.

Child tax credit and Earned income credit are the refundable tax credit that reduces the tax liability of individual or businesses.

So, the answer is 2 and 3.

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