Then there was some confusion about whether this was a credit or a deduction, and I used the example of some young individual in a first job making $30,000. So based on the bill, 40% of that is $12,000 and they are allowed to deduct $3,000. So they deducted $3,000 from their gross, because it says gross salary here, so now they are taxed on $27,000 instead of $30,000. This is a credit, which means that after all the deductions, including the $9,000 you get as a personal exemption.... Let's say they owed $4,000 in federal tax. So $3,000 of that could be deducted and they actually owed $1,000. That's what you mean by a credit. Is that not correct?
On November 25th, 2009. See this statement in context.