When we preparing the taxes that can possibly help to reduce the amount of the taxes that yow owe is credits and deductions.
The tax credit is provide the dollar for the dollar reduction of the income. that means $200 tax credits will save the $200 in the taxes. tax deduction will lower the taxable income and this can be calculated by the percentage of the marginal bracket tax. the credits are of two types : refundable credit and non refundable credit . the deduction are of the two types : the standard deduction and the itemized deduction.
Thus, the credits and the deductions will reduce the amount of the tax that we owe.
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