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egias_
New Member

What is the difference between a credit and a deduction?

 
2 Replies
VolvoGirl
Level 15

What is the difference between a credit and a deduction?

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

What is the difference between a credit and a deduction?

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