Research and create of list of tax obligations that are impacted by tax credits and debt. Then imagine that you or someone you know personally has a specific tax credit as well as a specific amount of debt (you choose the amounts). What specific impacts do these have on your/his/her tax obligations? Explain and provide details.
Tax obligations impacted by tax credits and debt
Tax credits are incentives that allows certain taxpayers to subtract the amount of the credit owed to the state (18). They can be given either to low earners as support or to someone who has already paid all their taxes in recognition. These can help taxpayers with paying their taxes (something that they are obliged to do).
Specific impacts that tax credits can make
For example, I were to owe $50 in taxes to the state but I had earned a $10 credit due to the fact that I have paid all of my taxes on time in the past, then I would only owe then $40 to the state because of the credit. The amount of taxes I pay can also be affected by tax deductions, which are deductions that reduce your taxable income.
So if I were to owe $100 but had a tax deduction of 10%, I would then owe $90, and with my $10 tax credit it would be $80. However, if I were to pay the whole original $100, a refundable tax credit would be issued to me. A refundable tax credit leftover taxes after the amount owed is paid, and that credit is returned to the taxpayer.