Tax Credits and Deductions: Keep More of Your Hard-Earned Mo

Maximize your tax savings with credits and deductions. Learn the difference between credits and deductions and discover money-saving opportunities.

Tax credits and deductions can significantly reduce your tax burden. Understanding what you're eligible for can save you hundreds or thousands of dollars annually. Tax Credits vs. Tax Deductions Understanding the difference is crucial: Tax Credits - Reduce your tax bill dollar-for-dollar - More valuable than deductions - Some are refundable (you get money back even if you owe no taxes) Tax Deductions - Reduce your taxable income - Value depends on your tax bracket - Can be itemized or taken as standard deduction Major Tax Credits for Working Families Earned Income Tax Credit (EITC) - For low to moderate-income workers - Maximum credit of $7,430 for families with three or more children (2023) - Refundable credit Child Tax Credit - Up to $2,000 per qualifying child under 17 - Partially refundable - Income limits apply Child and Dependent Care Credit - For childcare expenses while you work - 20-35% of eligible expenses - Maximum expenses of $3,000 per child American Opportunity Tax Credit - For higher education expenses - Up to $2,500 per student - 40% is refundable Common Tax Deductions Standard Deduction (2023) - Single: $13,850 - Married filing jointly: $27,700 - Head of household: $20,800 Itemized Deductions (if they exceed standard deduction) - State and local taxes (up to $10,000) - Mortgage interest - Charitable donations - Medical expenses over 7.5% of AGI Above-the-Line Deductions - Student loan interest (up to $2,500) - IRA contributions - Health Savings Account contributions - Educator expenses Strategies to Maximize Benefits To get the most from credits and deductions: - Keep detailed records - Understand income limits for credits - Consider timing of deductible expenses - Don't overlook smaller deductions - Consider professional help for complex situations Free Tax Preparation Help The IRS offers free tax preparation through: - Volunteer Income Tax Assistance (VITA) - Tax Counseling for the Elderly (TCE) - IRS Free File program Remember,