Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 13, Problem 1DQ
To determine
Explain whether a taxpayer receive more benefits from deducting an expense or from taking a credit. Also, explain the situation in the case of deduction from AGI.
Expert Solution & Answer
Explanation of Solution
If the margina tax rate of a taxpayer is less than 25%, it would be better for him/her to take a credit of 25% of the expense. But, if the marginal tax rate is greater than 25%, he/she would be benefited more from taking a deduction.
Otherwise, if the item are deductible from adjusted gross income(AGI), the taxpayer would get benefit onlr if he/she itemized his/her deductions.
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Chapter 13 Solutions
Individual Income Taxes
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