Wise-Wallet

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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}

Sequence-of-returns risk means big losses early in retirement can disproportionately hurt a portfolio that’s being drawn down.

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.