Simple Strategies to Reduce What You Owe the IRS

Understanding the difference between a tax credit and a deduction, and which ones you can claim, is the first step toward keeping more of your hard-earned paycheck. You don’t need complicated strategies, you need to nail the basics.

Tax Credits are the heavy hitters. They reduce your tax bill dollar-for-dollar. If you owe $1,000 and qualify for a $500 credit, you now only owe $500.

Tax Deductions reduce your taxable income. If you earn $50,000 and take a $1,000 deduction, the IRS only taxes you on $49,000. Your actual savings depend on your specific tax bracket.

Since these benefits aren’t automatic, we’ve put together a guide to the most common credits and deductions available. You can’t claim what you don’t know about.