Asked by Shelby Henderson on Apr 25, 2024
Conrad and Jill have a taxable income of $63,670.They discovered that they can receive a $1,500 tax credit for purchasing an energy -efficient furnace.How will this tax credit affect their taxes?
A) The tax credit will increase their taxable income by $1,500.
B) The tax credit will reduce their taxable income by $1,500.
C) The tax credit is added to the tax owed,not the taxable income.
D) The tax credit is subtracted from the tax owed,not taxable income.
Tax Credit
An amount subtracted from the income tax owed; the most popular credits are the Child Care Tax Credit and the Earned Income Credit.
Taxable Income
The amount of an individual's or corporation's income used to determine how much tax is owed, calculated as gross income minus deductions and exemptions.
Energy-Efficient Furnace
A heating system designed to use less energy for the same level of heating comfort compared to less efficient models.
- Identify and calculate deductions, credits, and exemptions and their effect on taxable income and tax owed.
Learning Objectives
- Identify and calculate deductions, credits, and exemptions and their effect on taxable income and tax owed.