Another piece of the tax puzzle is tax credits<\/strong>. This is money subtracted from the tax you owe.<\/p>\r\n Tax credits are very different from deductions or exemptions. Deductions and exemptions are taken away from your gross income before the tax you owe is calculated.<\/p>\r\n When a taxpayer qualifies for a tax credit, the credit is subtracted from the total amount of tax owed, dollar for dollar. This means that if a taxpayer owes [latex]$2,000[\/latex] in taxes and is eligible for a [latex]$500[\/latex] tax credit, their tax liability is reduced to [latex]$1,500[\/latex].<\/p>\r\n Tax credits<\/strong> are direct reductions in the amount of tax liability owed to the government.<\/p>\r\n<\/div>\r\n<\/section>\r\n Some of the tax credits are refundable. This means that if subtracting them from your tax results in a negative number, you receive a tax refund.<\/p>\r\n The federal government has placed income limits and restrictions on those eligible to receive tax credits because their value is so high. Here is a partial list of tax credits that you might qualify for:<\/p>\r\n Another piece of the tax puzzle is tax credits<\/strong>. This is money subtracted from the tax you owe.<\/p>\n Tax credits are very different from deductions or exemptions. Deductions and exemptions are taken away from your gross income before the tax you owe is calculated.<\/p>\n When a taxpayer qualifies for a tax credit, the credit is subtracted from the total amount of tax owed, dollar for dollar. This means that if a taxpayer owes [latex]$2,000[\/latex] in taxes and is eligible for a [latex]$500[\/latex] tax credit, their tax liability is reduced to [latex]$1,500[\/latex].<\/p>\n Tax credits<\/strong> are direct reductions in the amount of tax liability owed to the government.<\/p>\n<\/div>\n<\/section>\n Some of the tax credits are refundable. This means that if subtracting them from your tax results in a negative number, you receive a tax refund.<\/p>\n The federal government has placed income limits and restrictions on those eligible to receive tax credits because their value is so high. Here is a partial list of tax credits that you might qualify for:<\/p>\ntax credits<\/h3>\r\n
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\r\nAdding Chanajah\u2019s tax credits together, we find their total to be [latex]$8,190[\/latex]. That is more than the tax they owe, which was [latex]$4,300[\/latex]. Each of those credits is refundable, which means they will receive a refund. Subtracting the credits from the tax owed yields [latex]$4,300\u2212$8,190=\u2212$3,890[\/latex]. This is negative, so represents a refund of [latex]$3,890[\/latex].
\r\n[\/hidden-answer]<\/section>\r\nTax Credits<\/h2>\n
tax credits<\/h3>\n
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