To Encourage Low- to Moderate-Income Workers to Save for Retirement

question 32

Multiple Choice

To encourage low- to moderate-income workers to save for retirement, a tax credit called the Saver's Credit is available. Which statement about tax credits and tax deductions is true?

• A) Tax deductions are more favorable than tax credit for most taxpayers.
• B) Tax credits reduce taxes owed on a dollar-for-dollar basis.
• C) Tax credits reduce taxable income.
• D) Tax deductions reduce taxes owed on a dollar-for-dollar basis.