Question

The basic personal amount is a non-refundable tax credit that can reduce tax payable to zero for people with income under $11 000.T/F

Answer 1

The basic personal amount is indeed a non-refundable tax credit that can reduce one's tax owed to zero for certain low-income earners, although the specified amount may vary. The EITC is also aimed at supporting low-income earners, with its phase-out rules ensuring support up to a specific income level.

Step-by-step explanation:

The statement that the basic personal amount is a non-refundable tax credit that can reduce tax payable to zero for people with income under $11,000 is true. Non-refundable tax credits can be applied against taxes owed to reduce the liability. However, the specific basic personal amount threshold can vary; adjustments may be necessary due to inflation or changes in tax law.

For example, the Earned Income Tax Credit (EITC), which is different from the basic personal amount, is a refundable tax credit aimed at assisting low-income working taxpayers, particularly those with children. In 2013, a single parent with two children could receive a tax credit of up to $5,372 with the credit increasing with the amount of income earned up to $17,530. Beyond a certain income threshold, this credit begins to phase out.

In summary, tax codes often provide measures to support low-income earners, such as the basic personal amount or the EITC, which have their respective thresholds and rules for how they benefit taxpayers.

Answer 2

The basic personal amount is indeed a non-refundable tax credit that can reduce an individual's tax payable to zero for incomes under a certain threshold, but this threshold and the amount of the credit are subject to yearly adjustments and jurisdictional differences.

Step-by-step explanation:

The statement that the basic personal amount is a non-refundable tax credit that can reduce tax payable to zero for people with income under $11,000 is generally true. The basic personal amount functions as a non-refundable tax credit which can indeed reduce the amount of tax payable, potentially down to zero. However, it's important to note that the income thresholds and credit amounts are subject to change and may vary based on the tax year and jurisdiction. For example, the earned income tax credit (EITC) is another tax provision designed to help low-income individuals, where the amount of credit received varies with income levels and the presence of children in the household, and is slowly phased out as income rises beyond a certain level.