Chapter 3, Problem 7FPE

Summary Introduction

To discuss: The explanation and calculation the differences resulting from $1,000 tax credit with tax deduction of $1,000.

Tax credit is a sort of tax incentive that can lessen the measure of cash a taxpayer owes the government. In contrast to a tax deduction, which decreases the taxable income, a taxpayer can deduct a tax credit from the measure of taxes they owe, bringing down their tax liability gradually.