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But he gets those credits whether or not he reports his profit. On a cashflow basis, it will cost him 20%. You are right though, his tax bill at the end of t

But he gets those credits whether or not he reports his profit. On a cashflow basis, it will cost him 20%. You are right though, his tax bill at the end of the year would be about 8% of $45k.

ars 15y ago
That's not true - the EIC goes up when you make more (up till a limit).