Chapter $3$

Financial Planning Exercise $4$

Effect of tax credit versus tax exemption

Explain and calculate the differences resulting from a $$1,500$ tax credit versus a $$1,500$ tax deduction for a single taxpayer with $$47,000$ of pre$-$tax income. The standard deduction in $2018$ was

$$12,000$ for single. Note that personal exemptions were suspended for $2018.$ Use Exhibit $3\mathrm{.}3$ to determine the corresponding tax rate. Round the answers to the nearest cent.