Which of the following statements regarding tax credits is true?

A. They are deductions that depend on the taxpayer's filing status, age, and vision and that can be claimed by a taxpayer whose total itemized deductions are small.

B. They are deductions from the adjusted gross income based on the number of persons supported by the taxpayer's income.

C. They represent the income remaining after subtracting all allowable adjustments to income from the gross income.

D. They are personal expenditures that can be deducted from adjusted gross income when determining taxable income.

E. They are deductions from a taxpayer's tax liability that directly reduce the person's taxes due.

Question

Business

Madyson Vaughan

22 August, 05:00

Which of the following statements regarding tax credits is true?

A. They are deductions that depend on the taxpayer's filing status, age, and vision and that can be claimed by a taxpayer whose total itemized deductions are small.

B. They are deductions from the adjusted gross income based on the number of persons supported by the taxpayer's income.

C. They represent the income remaining after subtracting all allowable adjustments to income from the gross income.

D. They are personal expenditures that can be deducted from adjusted gross income when determining taxable income.

E. They are deductions from a taxpayer's tax liability that directly reduce the person's taxes due.

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Answers (1)

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Andreas Leblanc · Answer 1

The following statements regarding tax credits states that the deductions from a taxpayer's tax liability directly reduces the person's taxes due is true.

Explanation:

Tax credit is a amount of money that taxpayer's can subtract from taxes to be paid to the government. They reduce the taxable income and reduces the actual amount of taxes provided.

There are three basic types of tax credits they are non-refundable, refundable and partially refundable.

Earned income tax credit, Child tax credit are some examples of tax credits.