Question

.A taxpayer can choose either a tax credit or a tax deduction for foreign taxes paid, whichever provides the greater tax benefit.

True
False

Answer 1

It is true that a taxpayer can choose either a tax credit or a tax deduction for foreign taxes paid to reduce their tax liability, opting for the one that offers the greater tax benefit.

Step-by-step explanation:

The statement that a taxpayer can choose either a tax credit or a tax deduction for foreign taxes paid, whichever provides the greater tax benefit, is True.

Taxpayers have the option to take advantage of whichever method reduces their overall tax liability the most. A tax credit directly reduces the amount of tax owed, dollar for dollar, while a tax deduction lowers the overall taxable income.

Taxpayers typically calculate their taxes both ways to determine which option is more beneficial for their situation.