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Claiming individual tax credits or deductions

Posted on February 12, 2024

It’s vital to understand tax credits and deductions, since they change the amount of your tax bill — or refund. But which credits and deductions can you legally claim and what records do you need to show for eligibility?

Understanding tax credits
A tax credit reduces the income tax bill dollar-for-dollar that a taxpayer owes based on their tax return.

Some tax credits, such as the Earned Income Tax Credit, are refundable. If a person’s tax bill is less than the amount of a refundable credit, they can get the difference back in their refund.

To claim a tax credit, here’s what you’ll need accurate records to show your eligibility for the tax credits you are claiming

What to know about tax deductions
Deductions can reduce the amount of your total income before you calculate the tax you owe.

What is a standard deduction?

Most taxpayers take the standard deduction. Since it’s based on inflation, standard deduction amounts change each year. The amount of the standard deduction is also tied to a taxpayer’s filing status, age, disability (if any), and whether the taxpayer is claimed as a dependent by someone else.

Opting for itemized deductions

Some people itemize their deductions because itemization of all their deductions throughout the year reduces their taxable income more than taking the standard deduction. Generally, if a taxpayer’s itemized deductions are larger than their standard deduction, it makes sense to itemize.

Need online help with more tax questions?
Try going to Interactive Tax Assistant on IRS.gov. It can help you decide if you are eligible for many popular tax credits and deductions, for instance:

Got more complicated questions or need help preparing your 2023 taxes? We’re here to help. Give our knowledgeable CPAs a call to help you get started.