AnswersCMS 2026-2027 Economics and Personal Finance CREDIT RECOVERYPractice TestQuestion 5
5
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Practice Test

Question 5 • CMS 2026-2027 Economics and Personal Finance CREDIT RECOVERY

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

Answer
A
A tax credit occurs if you underpaid during the year, and a tax deduction occurs if you overpaid.
B
A tax credit reduces the amount of money you must pay, while a tax deduction reduces your taxable income.
C
A tax credit represents money owed to you, while a tax deduction represents money you owe.
D
A tax credit is owed money that collects interest, while a tax deduction is money that you do not have to pay.
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