Tax Credit Definition & Example - InvestingAnswers
Oct 1, 2019 · The child must live with the taxpayer for more than one-half of the tax year. In many cases, divorced parents decide which parent receives the child credit. The child tax credit is not a tax deduction, it is a credit. That means it is a dollar-for-dollar reduction in your tax bill rather than a reduction in your taxable income.
Value Added Tax | VAT | Meaning & Examples - InvestingAnswers
Jul 14, 2020 · The current income tax system is a progressive tax system designed to take a larger portion of taxes from higher-income earners. Costly New Tax Collection System. Introducing a VAT tax in the US would require establishing a new tax collection administration. Businesses would be required to establish procedures to calculate, collect, and pay VAT.
EIC -- Earned Income Tax Credit -- Definition & Example
Aug 12, 2020 · How Does the Earned Income Tax Credit (EIC) Work? Earned income is an IRS term for income obtained by participating in a business or trade -- typically, this means salaries, bonuses, wages, commissions, and tips. Union strike benefits are also considered earned income, as are long-term disability benefits received prior to minimum retirement age.
Dividend Tax Credit Definition & Example - InvestingAnswers
Aug 12, 2020 · The federal tax credit would be $1,250 x .15 = $187.50, and the provincial tax credit would be $1,250 x .04 = $50. Thus, the total tax payable on the dividend income is $250 - $187.50 - $50 = $12.50. This is equivalent to a 1% tax on the dividends received.
Saver's Tax Credit Definition & Example - InvestingAnswers
Aug 12, 2020 · The savers credit gives taxpayers a tax credit of up to $1,000 ($2,000 if filing jointly) for contributions to IRAs, 401(k)s and certain other retirement plans. The actual amount of the credit is a percentage of the savings amount (typically 10% to 50%).
Tax Attribute Definition & Example - InvestingAnswers
Oct 1, 2019 · John Doe qualifies for a $2,000 minimum tax credit. A tax credit is dollar-for-dollar reduction in John Doe’s tax bill. However, John Doe also declared bankruptcy, which resulted in his credit card company discharging $1,500 of his credit card debt. Although this means that John Doe no longer owes the $1,500, his tax credit is reduced by that ...
American Opportunity Tax Credit Definition & Example
Nov 11, 2020 · Eligible taxpayers can qualify for up to $2,500 under the American Opportunity Tax Credit. The credit can be used to offset secondary education tuition and certain qualifying expenses. The full tax credit is available to individuals whose modified adjusted gross income (AGI) is less than $80, 000 or married couples filing jointly with modified ...
Education Credit Definition & Example - InvestingAnswers
Oct 1, 2019 · 1. The American Opportunity Credit allows for up to $2,500 in tax credit per student. 2. The Hope Credit allowed for up to $3,600 per student, but this program ended in 2009. 3. The Lifetime Learning Credit allows for a $2,000 tax credit for undergraduate, graduate, and professional study per student per tax year.
DTL -- Deferred Tax Liability -- Definition & Example
Oct 1, 2019 · This 'unrealized' tax debt is put into an account on the balance sheet called deferred tax liability. You can find DTL on the balance sheet or on a fund 's statement of assets and liabilities. As the name implies, DTL is on the liability side of the books, along with other long-term debt obligations.
Deferred Income Tax Definition & Example - InvestingAnswers
Aug 12, 2020 · Due to the manner by which XYZ accounts for income against tax codes, it is not required to pay tax on the remaining $150,000 until the following quarter. As a result, the $150,000 is still reflected on the income statement as part of the $1 million in realized income for the current quarter and the amount of tax on the $150,000 is reflected as ...