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

what is the difference between a tax credit and a tax deduction? a. a tax credit represents money owed to you, while a tax deduction represents money you owe. b. a tax credit reduces the amount of money you must pay, while a tax deduction reduces your taxable income. c. a tax credit is owed money that collects interest, while a tax deduction is money that you do not have to pay. d. a tax credit occurs if you underpaid during the year, and a tax deduction occurs if you overpaid.

what is the difference between a tax credit and a tax deduction? a. a tax credit represents money owed to you, while a tax deduction represents money you owe. b. a tax credit reduces the amount of money you must pay, while a tax deduction reduces your taxable income. c. a tax credit is owed money that collects interest, while a tax deduction is money that you do not have to pay. d. a tax credit occurs if you underpaid during the year, and a tax deduction occurs if you overpaid.

Answer

Brief Explanations:

A tax credit is a dollar - for - dollar reduction of the tax liability, directly reducing the amount of tax you owe. A tax deduction reduces your taxable income, which in turn may reduce the amount of tax you owe based on your tax rate.

Answer:

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