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Is a tax credit where your taxable income is decreased by amount of the tax credit? Or....?
or is it where are credited the amount of the tax credit as taxes already paid?
1 Answer
- JudyLv 71 decade agoFavorite Answer
A deduction decreases your taxable income that your tax is calculated on. A credit decreases your actual taxes. Most credits are not refundable - that means that if you have a credit higher than your tax, you don't get the extra back, it only takes your tax to zero. There are a very few credits that are refundable, so if the credit is more than your tax, you get the extra money.
