What is the difference between a tax credit and a tax deduction? Choose the corr

Question

What is the difference between a tax credit and a tax deduction? Choose the correct answer below is a fxed amount on your return for each person supported by your income A tax deduction is a sum of money that reduces the income tax owed by the credit is an amount that you can subtract from your adjusted gross income A tax full dollar-for-dollar amount of the credit full dolar-for-dollar amount of the credit full dollar for-dollar amount of the credit full dollar-for-dollar amount of the credit deduction is a sum of money that reduces the income tax owed by the s an amount that you can subtract from your adfjusted gross income A tax credit is a sum of money that reduces the income tax owed by the each person supported by your income A tax credt is a sum of money O C. A tax O D. A tax deduction is a fxed amount on your return for that reduces the income tax owed by the

Explanation / Answer

Ans. Option(c)

A tax credit is an amount of money that taxpayers are permitted to subtract from taxes owed to their government. The value of a tax credit depends on the nature of the credit; certain types of tax credits are granted to individuals or businesses in specific locations, classifications or industries. Unlike deductions and exemptions, which reduce the amount of taxable income, tax credits reduce the actual amount of tax owed

Tax deduction is a reduction of income that is able to be taxed and is commonly a result of expenses, particularly those incurred to produce additional income. The difference between deductions, exemptions and credit is that deductions and exemptions both reduce taxable income, while credits reduce tax.

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