Lawrence has a marginal tax rate of 24%. He suddenly realizes that he neglected to include a $5,000 tax deduction. How will this oversight affect his taxes? =Lawrence paid $1200 excess tax because Lawrence neglected $ 5000 tax deduction 25. Impact on Taxes. From question 24, if Lawrence had forgotten a $5000 tax credit (instead of a $5000 tax deduction), how would his taxes be affected?
24. Impact on Taxes.
Lawrence has a marginal tax rate of 24%. He suddenly realizes that he neglected to
include a $5,000 tax deduction. How will this oversight affect his taxes?
=Lawrence paid $1200 excess tax because Lawrence neglected $ 5000 tax deduction
25. Impact on Taxes. From question 24, if Lawrence had forgotten a $5000 tax credit (instead
of a $5000 tax deduction), how would his taxes be affected?
Tax Deduction is defined as the claims that are made to reduce our taxable income, arising from various investments and expenses incurred by a taxpayer.
Income tax deduction reduces the overall tax liability. It is a type of tax benefit which helps save tax.
Tax Credit is defined as a claim that reduces the tax payers final tax bill.
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