Which of the following statements are true regarding the calculation of income tax liability?

(1) the standard deduction or itemized deductions are subtracted from gross income to arrive at adjusted gross income

(2) credits are applied to reduce taxable income

(3) the standard deduction or itemized deductions are subtracted from adjusted gross income to arrive at taxable income

(4) the number of exemptions (personal and dependency) may need to be adjusted to arrive at taxable income.