Make the most of these two bright spots at tax time

Tax credits and tax deductions are the two main ways you can lower the amount of taxes you pay. But you have to know how they work and which ones you’re eligible for because they don’t claim themselves – you have to do it

Tax credits lower the amount of taxes you owe, dollar for dollar. If you owed $1,000 in taxes but could claim a $100 credit, you’d only owe $900.

Tax deductions, on the other hand, lower your taxes by reducing the amount of your income that’s taxable. A $100 tax deduction wouldn’t lower your taxes owed by the full $100, it would lower your taxable income by that $100. The reduction in taxes owed would probably be closer to $20 (assuming a 20% tax rate, and simplifying a little bit).

We’ve pulled together some of the most common (and valuable) tax credits and deductions available to get you started, just click here to start saving on your taxes.