What is a tax credit?

Tax credits reduce the amount of taxes you pay. Similar to tax deductions (more on this next week) tax credits can save you money, possibly quite a bit, when it’s time to pay your taxes.

A tax credit reduces your tax bill by the full amount of the credit itself. So if you owed $2,500 in taxes and you are eligible for a $500 tax credit you would only owe $2,000 in taxes after claiming the credit. Tax credits can seriously reduce the amount of taxes you owe, or increase your refund.

So how do you find these tax credits and know which ones you can claim? We’ve got more information on that for you right here.