Wise-Wallet

Description of image

Question 13

Deductions reduce taxable income; credits reduce tax owed directly. Confusing them leads to overestimating benefits.

What’s the practical difference between deductions and credits?

Did You Also Know...

^{By Wise Wallet}

Choosing a shorter auto loan reduces total interest paid but increases monthly payments—tradeoffs between cost and cash flow matter.

Deductions reduce tax owed dollar-for-dollar; credits reduce taxable income.They are the same thing with different names.Credits reduce tax owed dollar-for-dollar; deductions reduce taxable income.Deductions are always better than credits.