Question

Why would the head of organisations dependent on charitable contributions, argue that giving to charity should...

Why would the head of organisations dependent on charitable contributions, argue that giving to charity should be treated as a deduction and not a tax credit?

Homework Answers

Answer #1

There is difference between tax deduction and tax credit as tax credit is more advantageous than tax deduction so the head of organisations dependent on charitable contribution wants tax credit than tax deduction

Take an example of 10000 taxable income and if there is 500 tax credit then 500 is reduced from the tax payable which many be (20%*10000)=2000 so 2000-500=1500

tax deduction of 500 means taxable income reduced by 500 so taxable income is 10000-500=9500 and tax is =9500*20%=1900

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