What Are Tax Credits?

Tax credits directly reduce the amount of tax owed, making them more beneficial than deductions. They can be refundable or non-refundable. Refundable credits can result in a refund if they exceed your tax liability.

Common Tax Credits

• Earned Income Tax Credit: A benefit for working individuals with low to moderate income.
• Child Tax Credit: A credit for taxpayers with dependent children.

Understanding tax credits can significantly impact your tax return.