Dear Valued Clients and Visitors: As our nation responds to COVID-19, our firm is taking precautionary measures by closely following and reinforcing the guidelines from the CDC and local health authorities. Our physical office is open on a intermittent basis. However, please be assured that we are open for business and ready to serve your needs.

If you have a tax problem or inquiry please call and if we are not in leave a message. A return phone call will be made within a short period of time. Now is the time to address your tax matter. We remain committed to our clients and colleagues through these unusual times. Please stay safe and healthy.

Law Offices of Robert T. Leonard, APC
Free Consultations Available
Toll Free 888-408-9486

What is the difference between a tax credit and a tax deduction?

Sometimes it feels like the world changes when daylight savings time comes around. In reality it is just another hour, but as the days get longer and spring arrives, don’t be surprised if you want to spend more time outdoors; especially after work.

Unfortunately, what you gain in time outside you lose in time preparing your taxes. We must remind our readers that the federal income tax filing deadline is less than 30 days away. So between now and then, it is prudent to shore up your calculations to ensure a timely filing and to use all your applicable deductions and tax credits.

But most people still don’t quite understand the difference between a tax credit and a tax deduction. This post will briefly explain. 

Essentially, a tax credit is a dollar for dollar reduction of the taxes you would owe based on your income. So if you qualify for a $1500 tax credit, you would be entitled to a $1500 reduction in your income taxes. Depending on the size of the credit, you could be deemed to have paid too much in taxes withheld from your paycheck; thereby entitling you to a refund.

Conversely, a tax deduction saves you money based on your marginal tax rate. So if the same $1500 tax credit only qualifies as a deduction, and you your tax rate is 28 percent (for example), your savings would only be $420. Indeed, this is considerably less than a tax credit, but every little bit helps when it comes to claiming a refund.

If you have additional tax questions, an experienced attorney can help. 

No Comments

Leave a comment
Comment Information

Send Us A Quick Message

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Law Offices of Robert T. Leonard, APC

Woodland Hills Office
21700 Oxnard Street
Suite 2060
Woodland Hills, CA 91367

Toll Free: 888-408-9486
Phone: 818-224-7935
Fax: 818-587-3833
Woodland Hills Tax Law Office

Los Angeles Office
10100 Santa Monica Blvd.
Suite 300
Los Angeles, CA 90067

Toll Free: 888-408-9486
Phone: 818-224-7935
Fax: 818-587-3833
Map & Directions

Call Today