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Tax Deductions VS Tax Credits

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Tax Deductions

Subtract tax deductions from your income before you figure the amount of tax you owe.

 

Tax Credits

Subtract tax credits from the amount of tax you owe. There are two types of tax credits:

  • A nonrefundable tax credit means you get a refund only up to the amount you owe.
  • A refundable tax credit means you get a refund, even if it's more than what you owe.