Tax Consulting Tax Credits and Deductions

Question 1

What is the primary difference between a tax credit and a tax deduction?

Accepted Answer

A tax credit reduces tax owed dollar-for-dollar; a deduction reduces taxable income

Answer

A tax credit reduces taxable income; a deduction reduces tax owed directly

Answer

Both reduce taxable income by the same amount

Answer

A tax credit applies only to businesses; a deduction applies only to individuals

Question 2

Which of the following is a fully refundable federal tax credit?

Accepted Answer

Earned Income Tax Credit (EITC)

Answer

Child and Dependent Care Credit

Answer

Lifetime Learning Credit

Answer

American Opportunity Tax Credit

Question 3

What is the standard deduction amount for a single filer for tax year 2024?

Accepted Answer

$14,600

Answer

$12,550

Answer

$13,850

Answer

$15,200

Question 4

Which expense category was suspended as a miscellaneous itemized deduction by the Tax Cuts and Jobs Act of 2017?

Accepted Answer

Unreimbursed employee business expenses

Answer

Charitable contributions

Answer

Mortgage interest on a primary residence

Answer

State and local taxes paid

Question 5

What is the maximum amount of state and local taxes (SALT) deductible on a federal income tax return under current law?

Accepted Answer

$10,000

Answer

$5,000

Answer

$7,500

Answer

$15,000

Question 6

For tax year 2024, what is the Child Tax Credit amount per qualifying child?

Accepted Answer

$2,000

Answer

$1,000

Answer

$1,500

Answer

$3,600

Question 7

Which of the following is an 'above-the-line' deduction that reduces adjusted gross income?

Accepted Answer

Student loan interest

Answer

Home mortgage interest

Answer

Charitable contributions

Answer

Medical expenses