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What Is a Tax Credit?
Subtract tax credits from the amount of tax you owe. There are two types of tax credits:
- A nonrefundable tax credit means you get a refund only up to the amount you owe.
- A refundable tax credit means you get a refund, even if it's more than what you owe.
What Is a Tax Deduction?
Subtract tax deductions from your income before you figure the amount of tax you owe.