Reader Question: Tax Credit or Deduction?

It’s not uncommon to start thinking about taxes this time of year, as well as tax breaks. Indeed, I recently received this question from a reader:
What’s the difference between a tax credit and a tax deduction?
This is a very interesting question, and one that can actually affect how your taxes come out. Here are the basics of the differences between tax credits and tax deductions:

Tax deduction: I tax deduction is something that reduces your taxable income. This comes out before you figure out how much you owe in taxes. You take deductions on the front part of your 1040 form, …read more