Tax D​eduction VS Tax Credit

Most of us are confused about these two terms.  I was…..Here is a link to visual illustration to explain the differences.

Tax deduction vs tax credit

tax deduction vs tax credit-page-001.jpg

  • In the above example, I calculated tax based on “Married filing jointly status”

     Most common tax credits

  • Earned Income Tax Credit

  • American Opportunity Tax Credit

  • Child and Dependent Care Credit

  • Savers Tax Credit

    Most common tax deductions

  • Retirement Contributions

  • Charitable Donations

  • Mortgage Interest Deduction

  • Interest in College Education Costs

  • Self-Employment Expenses

 

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