How is a tax credit different from a tax deduction?
A tax deduction decreases your taxable income, while a tax credit decreases your overall taxes and may lead to you getting money from the IRS. Here’s an example: Taxable Income: $60,000 Taxes Owed: $1,000 The effects of a $5,000 tax deduction: Taxable Income: $55,000 Taxes Owed: (computed based on $55,000 taxable income). The effects of a $5,000 tax credit Taxable Income: $60,000 Taxed Owed: $0 Money in your pocket: $4,000 Read all articles about ways new housing bill (HR 3221) affects Georgia home buyers.
