03/04/2026
π‘ Tax Tip: Understanding Deductions vs. Credits
Many taxpayers hear these terms every year but arenβt sure what the difference is. Knowing how they work can help you understand how your refund or balance is calculated.
β Tax Deductions lower your taxable income.
This means the IRS taxes you on a smaller amount of income.
Example:
If you earn $50,000 and claim $5,000 in deductions, youβre only taxed on $45,000.
Common deductions include:
β’ Mortgage Interest
β’ Student Loan Interest
β’ Charitable Donations
β Tax Credits reduce the actual amount of tax you owe β dollar for dollar.
Example:
If you owe $3,000 in taxes and receive a $1,000 credit, you now only owe $2,000.
Popular credits include:
β’ Child Tax Credit
β’ Earned Income Credit
β’ Education Credits
β In many cases, credits save you more because they reduce your tax bill directly.
If youβre not sure which deductions or credits you qualify for, weβre here to help make sure you receive every benefit you deserve.
π Office: (210) 444-9003
π± Cell: (210) 730-8002
Grace & Victory LLC Tax and Notary
Your trusted partner in Tax and Notary Services.