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by NoPiece 3153 days ago
"Tax credits are subtracted not from taxable income, but directly from a person’s tax liability; they therefore reduce taxes dollar for dollar. As a result, credits have the same value for everyone who can claim their full value."

http://www.taxpolicycenter.org/briefing-book/whats-differenc...
2 comments
maxerickson 3153 days ago
Right, they are talking about the situation where someone only owes $6,000 in taxes. They get a $6,000 tax credit.

So setting aside whether this is fair or unfair, people that owe more taxes clearly get a bigger benefit from the credit.

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rukittenme 3153 days ago
The poor don't have taxable income. You can only claim the credit if you itemize which is restricted to even higher tax brackets.
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maxerickson 3153 days ago
No need to itemize, it is reported on line 54 and offsets line 44:

https://www.irs.gov/pub/irs-pdf/f1040.pdf

But lots of people don't end up paying $7500 in income taxes.

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