How to calculate tax credit

Kelly Phillips Erb

Taxpayers often use the terms "deduction" and "credit" as though they're the same thing, but they're not. They're actually very different terms, and being aware of the distinctions between the two can help you make good choices at tax time -- and maybe put some extra money back in your pocket.

A deduction is a reduction in your taxable income, while a credit is a reduction in your taxes due.

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