tax credit vs tax deduction
Definitions
noun
- a direct reduction in tax liability (not dependent on the taxpayer's tax bracket)
Examples
When the tax credit was in place, a person could buy a house for $8,000 down (the bluebook value of a 2005 Dodge Caravan).
It will also make changes to the research and development tax credits schemes by redefining them to make them easier to claim.
Tax credits will still only be used for formal care such as a nursery or childminder.
Definitions
noun
- a reduction in the gross amount on which a tax is calculated; reduces taxes by the percentage fixed for the taxpayer's income bracket
Examples
Will the grower lose all expenses and other tax deductions relating to his or her small business or farming enterprise?
During the national election campaign, Mr. Klein boasted he'd open more private clinics and begin a tax deduction based on income to raise more revenue.
Calculate and schedule each tax deduction on the proper form.
