We have only Few Days left to the end of Tax Season; Many of Our Clients ask if a Tax Credit is better than a Deduction. Just to enlighten us, A Tax Credit is a Dollar -For-Dollar Reduction of the Taxes you owe; For instance, A $100 Credit means you pay $100 less in Taxes.
A Deduction reduces the Taxes, you owe by a Percent of every Dollar, you're allowed to deduct. You Calculate the worth of your Deduction by multiplying your marginal (Or Top) Tax Rate by the amount of the deduction. If you're in the 25% Tax Bracket, a $100 Deduction means you will pay $25 less in Taxes (0.25 times $100).
Need More Clarification on Getting the Best of your Tax Deduction and Credits? Contact Us Today and We will be Glad to help you out.