Are tax credits better than deductions? Advice for top tax questions

The video discusses the increasing costs and time associated with tax preparation, highlighting the average time and cost spent by Americans. Ted Jenkin, a personal finance expert, provides insights on whether individuals on disability or Social Security need to file taxes. He explains the difference between tax credits and deductions, emphasizing the benefits of credits. The video also covers the conditions for deducting student loan interest and the potential for a first-time home buyer tax credit. Viewers are encouraged to submit their tax questions via social media or a hotline.

What is the average amount of time Americans spent filing their taxes last year according to the IRS?

• 10 hours

• 20 hours

• 13 hours

• 15 hours

If someone is only receiving Social Security disability, what is the general advice regarding filing taxes?

• They probably don't need to file taxes.

• They should file taxes only if they owe money.

• They should file taxes to avoid penalties.

• They must file taxes.

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

• A tax deduction reduces taxable income, while a credit reduces tax liability dollar for dollar.

• Both reduce tax liability but in different amounts.

• A tax credit reduces taxable income, while a deduction reduces tax liability.

• Both reduce taxable income but in different amounts.

Under what condition can a single filer fully deduct student loan interest?

• If they make less than $50,000 annually.

• If they make less than $150,000 annually.

• If they make less than $100,000 annually.

• If they make less than $75,000 annually.

Is there a first-time home buyer tax credit available this year?

• No, there are no credits available.

• Yes, a $10,000 credit is available.

• No, but a $10,000 credit is proposed.

• Yes, a $5,000 credit is available.