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Level 1
March 12, 2020
Question

What is the difference between a credit and a deduction?

  • March 12, 2020
  • 2 replies
  • 27 views
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2 replies

VolvoGirl
Level 15
March 12, 2020

A deduction reduces your income so you get taxed on a lower amount.

 

A credit is subtracted off the tax.  Some credits can only reduce your tax to zero.  In which case you will get all your withholding back.

 

But some credits are refundable meaning you can get it even if you don't owe any tax.

VolvoGirl
Level 15
March 12, 2020