mjwojtukiewicz
Member
You left out the $8000 tax liability part in your initial post.Because without the $7500 tax credit he would have owed an additional $4,000 ($8,000 tax liability - $4,000 in pre-payments = $4,000 remaining to be paid to satisfy your tax liability).
These are round number examples to illustrate a point and help you understand the difference between tax liability (what you actually owe) and withholdings (pre-payments over the year to offset what you actually owe).