Conrad and jill have a taxable income of 63,670. they discovered that they are able to receive $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

Question

Gia Holt

Mathematics

4 June, 00:52

Conrad and jill have a taxable income of 63,670. they discovered that they are able to receive $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

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Answers (1)

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Taylor Eaton · Answer 1

The answer is letter D. The tax credit will be subtracted from the tax owed, not taxable income. This is because a tax credit is something that will be deducted or offset to your liability and that is the tax you owed based on your own taxable income.