What is the difference between a tax credit and a tax deduction?
A tax credit is a dollar for dollar reduction of the taxes you owe. For example: A $1000 credit means you pay $1000 less in taxes. WHILE a tax deduction reduces the taxes you owe by a percent of every dollar you are allow to deduct. For example: If you are in the 25% tax bracket, a $1000 deduction means you’ll pay $250 less in taxes.