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New Member
posted Mar 12, 2020 4:11:57 PM

What is the difference between a credit and a deduction?

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2 Replies
Level 15
Mar 12, 2020 4:15:20 PM

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.

Level 15
Mar 12, 2020 4:22:44 PM