25. fill in the blank: a $500 tax credit will reduce your tax bill (more than, less than, the same as) a…

25. fill in the blank: a $500 tax credit will reduce your tax bill (more than, less than, the same as) a $500 tax deduction.\n26. when filing your taxes, how should you decide if you should itemize your deductions or take the standard deduction?

25. fill in the blank: a $500 tax credit will reduce your tax bill (more than, less than, the same as) a $500 tax deduction.\n26. when filing your taxes, how should you decide if you should itemize your deductions or take the standard deduction?

Answer

Brief Explanations:

  1. A tax - credit directly reduces the tax liability dollar - for - dollar. A tax - deduction reduces taxable income, and the actual tax savings depends on the tax rate. So a $500 tax credit will reduce the tax bill more than a $500 tax deduction.
  2. You should itemize deductions if the total of your itemized deductions (such as mortgage interest, state and local taxes, charitable contributions etc.) is greater than the standard deduction amount set by the tax authorities for your filing status.

Answer:

  1. more than
  2. Itemize if total itemized deductions > standard deduction.