Respuesta :
Tax credits allow taxpayers to deduct an amount from of the income taxes individuals must pay, dollar for dollar.
Define the term tax credit?
The tax credit is a reduction in your tax liability on an exact dollar for dollar basis. Your net liability is zero, for instance, if you owed $1,000 in federal income taxes but are entitled to a $1,000 tax credit.
- Because tax credits lower the total amount of tax owed rather than simply the amount on taxable income, they are preferable to tax deductions.
- Tax credits can be classified as nonrefundable, refundable, or partially refundable.
- Taxpayers benefit greatly from refundable credits because they are fully reimbursed.
- Although a nonrefundable credit can make your tax liability zero, it cannot give you a tax refund.
To encourage particular behaviors that are good for the economy, the environmental, or something else that the government deems vital, the state and federal governments may offer tax credits.
To know more about the tax credit, here
https://brainly.com/question/3350870
#SPJ4
