Question

The primary difference between pre-tax and post-tax deductions is:

• Pre-tax deductions include child support.

• Post-tax deductions reduce tax obligations.

• Post-tax deductions reduce gross pay.

• Pre-tax deductions reduce tax liability.

Answer 1

Pre tax deductions are taken from the employee gross pay of the month from their Paycheck which will reduce the income tax liability of the employee, whereas on the other hand post tax deductions are taken from the employee paycheck after all the taxes have been withheld. Therefore option 2nd is incorrect.

Also post tax deductions do not have any effect on employee taxable income. So the option 3rd is also incorrect.

Therefore the correct option is 4th.

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