Question

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Tax savings can be measured by:

Reduced tax liability, additional tax credits, and increased take-home pay.

Take-home pay and HSA account balance changes.

Take-home pay and retirement account balance changes.

Tax return results and HSA account balance changes.

Answer 1

Assumption 1:- In absence of specific information Question is treated as MCQ and Answered Accordingly.

Assumption 2:- Answer is given Using United States (US) Tax Law.

ANSWER:

Tax Saving Can be Measured by : - A. Reduced Tax Liability, Additional Tax Credit and Increased Take-Home Pay.

Explanation of Answer:

Tax Saving means Reduction of Tax Payable (Tax Liability) by (of) the Taxpayer.

Tax Saving can be Measured by following  

Reduced Tax Liability - Reduction of Tax Liability (Tax Payable) implies Tax Saving for the taxpayer.

Tax Credits - Subtracted from Computed Tax to arrive at Net Tax Payable.

Additional Tax Credits reduce Tax Payable as Tax Credits are Subtracted(deducted) from Computed Tax to arrive at Net tax payable. Thus more additional tax credit implies more Tax Saving for the Taxpayer.

Take-Home Pay - Take-Home Pay means Net Pay received by taxpayer after deducting for Taxes, Retirement Benefits etc from Gross Payment Received.

Thus, Increase in Take-Home Pay implies Reduction of Tax Liability that is tax saving for the taxpayer.

Other things mentioned in question may not be necessary result into tax saving for the taxpayer.

1. Change in Balance of HSA and Retirement Account - As clear reason for change in Health Saving Account and Retirement not Given. Change in balance of Health Saving Account may be due to employer Contribution which will not result in Tax Saving as Contribution from employer is Non- Deductible which means Contribution from employer can not claimed as Deduction (Reduction) from Income resulting in No Tax saving as Tax liability will be reduced.

2. Take-Home Pay and Tax Return Results - Only From Take-Home Pay or Tax Return Results one can not measure Tax-Saving. If there is Increase or Decrease in Take-Home Pay one can measure the impact on Tax-Saving due to such increase or decrease of Take-Home Pay and Same is applicable for Tax Return Result.

Thus, From Above Explanation Option A (Reduced tax liability, additional tax credits and increase in Take-Home Pay) is most suitable option to measure Tax-Saving for taxpayer.