Don’t you just feel like an adult when you are reading articles about taxes and tax returns? I know I do! Since I want you to get all the information you could get when it comes to taxes, in this article I really want to focus on what tax credit is because let’s face it, some of us barely know what the term tax means, so, why not expand our barely-there knowledge and actually learn a lot more when it comes to tax terms. Plus, by knowing more about taxes, you might even be avoiding jail time because in case you didn’t know, if you don’t pay your taxes, you might be faced with some time behind the bars!
Let’s define the term with some very simple words!
I don’t know about you, but I find paying taxes kind of annoying but, there is a word in the tax world you might like, and that is, tax credits! Why? Well because these credits actually mean that you are able to subtract from the amount of money you have to pay the government but this is done taking some factors into consideration.
Are there different types of tax credits?
Yes! And they will differ from person to person. Especially, if they are a natural person or a business entity. Also, the location and the type of industry you work in might influence your tax credits.
Let’s talk a bit more about the different types of tax credits!
The first tax credit I want to talk about is the nonrefundable tax credit. These are items that are simply deducted from all tax liabilities until it equals to 0 dollars.
Now, another one I should mention is the opposite which is refundable tax credits. These are the type of credits that you are going to like the most as they are the most beneficial of all tax credits. At least according to my standards! Some of these types of credits are available for when someone is raising kids, paying for their education or their own and coverage relating to health care.