what is the difference between a tax credit and a tax deduction?\na. a tax credit represents money owed to…

what is the difference between a tax credit and a tax deduction?\na. a tax credit represents money owed to you, while a tax deduction represents money you owe.\nb. a tax credit reduces the amount of money you must pay, while a tax deduction reduces your taxable income.\nc. a tax credit is owed money that collects interest, while a tax deduction is money that you do not have to pay.\nd. a tax credit occurs if you underpaid during the year, and a tax deduction occurs if you overpaid.\nplease select the best answer from the choices provided\na\nb\nc\nd

what is the difference between a tax credit and a tax deduction?\na. a tax credit represents money owed to you, while a tax deduction represents money you owe.\nb. a tax credit reduces the amount of money you must pay, while a tax deduction reduces your taxable income.\nc. a tax credit is owed money that collects interest, while a tax deduction is money that you do not have to pay.\nd. a tax credit occurs if you underpaid during the year, and a tax deduction occurs if you overpaid.\nplease select the best answer from the choices provided\na\nb\nc\nd

Answer

Brief Explanations:

A tax credit is a dollar - for - dollar reduction of the tax liability, meaning it directly reduces the amount of tax you must pay. A tax deduction reduces your taxable income. For example, if your income is $50,000 and you have a $5,000 tax deduction, your taxable income becomes $45,000. Then the tax is calculated on the $45,000.

Answer:

B. A tax credit reduces the amount of money you must pay, while a tax deduction reduces your taxable income.