Question

Which of the following can be used to reduce your federal income taxes?

A) Child support payments for a six year old
B) Real estate taxes
C) Provincial income taxes
D) Student loan interest

Answer 1

To reduce federal income taxes, real estate taxes and student loan interest can be used as deductions, while child support payments cannot. Provincial income taxes are not applicable, but state income taxes in the U.S. can be deductible.

Step-by-step explanation:

The options provided in the question fall under various tax deduction and credit categories that can affect your federal income taxes. Among the options given:

• Child support payments are not deductible for the payer and aren't included in the income of the recipient, so they cannot be used to reduce your federal income taxes.
• Real estate taxes can be used to reduce your federal income taxes if you itemize deductions on Schedule A (Form 1040).
• Provincial income taxes are not applicable in the United States as this term refers to taxes imposed by Canadian provinces. Instead, state income taxes, which are similar, can be deducted if you itemize deductions on Schedule A (Form 1040).
• Student loan interest can be deducted up to a certain amount as an adjustment to income, even if you don't itemize deductions, which reduces your federal income taxes.

Additionally, earned income tax credits, child tax credits, and government assistance through the TANF program impact the federal government's finances through direct outlays or loss of tax revenue.

Answer 2

Child support payments are not tax-deductible, but Child Tax Credit may apply. Real estate taxes and state income taxes (not provincial) can be deducted from federal income taxes. Student loan interest is also deductible, depending on eligibility.

Step-by-step explanation:

The options provided for reducing federal income taxes each have different qualifications for tax deductibility. Payments for child support are not deductible from your taxable income. However, you may be eligible for a reduction in your federal income taxes through the Child Tax Credit (CTC) if you have qualifying children, which can include a six-year-old dependent.

Real estate taxes paid on property you own can be deducted up to a certain limit, and are often included as part of itemized deductions on your tax return. Provincial income taxes do not apply in the United States, but state income taxes that you pay can be deducted from your federal income taxes.

Lastly, the interest paid on student loans may be deducted, subject to income limitations and other criteria. Each of these deductions aims to reduce your overall taxable income, thus potentially lowering the amount of taxes you owe to the federal government.