1) Explain the distinction between a deduction and a credit.
2) What is the normal due date for the tax return of calendar-year taxpayers? What happens to the due date if it falls on a Saturday, Sunday, or holiday?
3) Is there any tax advantage for an individual who held an appreciated capital asset for eleven months to delay the sale of the asset? Explain.© BrainMass Inc. brainmass.com October 25, 2018, 7:23 am ad1c9bdddf
1) A tax deduction reduces a taxpayer's total tax liability. Examples of common deductions include medical expenses, work expenses, mileage expenses, charity contributions, real estate taxes, and mortgage interest paid. A credit is refundable, meaning it decreases your total tax owed on the federal tax return dollar for dollar. If you owe $1,000 after deductions are taken and you receive an earned income tax credit worth $2,000, you will receive a $1,000 refund (2,000 minus the $1,000 you owe). Deductions don't ...
This solution discusses several tax accounting concepts. The distinction between a deduction and a credit are given. I also discuss the normal due date for tax returns when the taxpayer is a calendar year taxpayer, and what happens to taxpayers if the due date falls on a day other than the last day of the filing season. In addition, I also discuss any tax advantages that result from an individual who holds an appreciated capital asset for eleven months to delay the sale of an asset.
Differences between the following components of taxable income
What are the differences between the following components of taxable income? Provide at least one example of each.
o Deductions for AGI and deductions from AGI
o Gross income and AGI
o AGI and taxable income
o Tax deduction and tax credit
o Personal exemption and dependency exemption