If you are thinking of making your
maybe you need this information in Spanish that gives you the essential guide to navigate the world of tax credits and deductions. But why are these tools so important in your tax return? Deductions have the power to reduce your income before the tax payable is determined, while credits can decrease the amount of taxes owed or even increase your refund. What's more, there are certain credits that could give you a refund, even if you don't owe taxes. Before filing your return, it's essential to determine your eligibility for these tax benefits, and here we'll show you how.
Tax credits
Think of tax credits as direct discount coupons for your tax bill. While deductions are like special offers that reduce the price (in this case, your income) before calculating the total payable, tax credits are like discounts that are applied directly to the final total.
For example, if after all your deductions you owe $1,000 in taxes but have a tax credit of $200, then you will really only pay $800. It's a direct saving in your pocket. That's why tax credits can be so valuable: They reduce the amount you owe, dollar for dollar. Here you can find some credits that are important to know:
- Credit for Families and Dependents: This credit benefits those who have children or dependents in their home. It is designed to help families offset the costs associated with the care and education of minors or dependents.
- Income and Savings Credits: The earned income tax credit and the saver tax credit are two examples. They are intended for people with low to moderate incomes and can result in a significant refund.
- Loans for Homeowners: If you recently purchased a home, you may qualify for certain tax credits. These credits may be related to mortgage interest or real estate taxes.
- Health Care Credits: These credits are designed for people who have significant medical expenses during the year or who are enrolled in certain types of health plans.
Tax Deductions
Imagine tax deductions as a kind of rebate that you can take before calculating how much you owe in taxes. Instead of paying taxes on your entire income, deductions allow you to subtract certain amounts first, meaning you only pay taxes on a smaller amount.
Deductions are a valuable tool to optimize your tax situation. However, the key is knowing which ones apply to you and how to maximize them. For a more detailed analysis on deductions, we invite you to read our specific article on this topic, where we take a deep dive into each available deduction. You can find more information and useful tips in the following link.
The most common deductions for individuals are:
- Work-Related Deductions: If you have had expenses for tools, uniforms, or education related to your job, you can deduct these costs.
- Itemized Deductions: These include expenses such as mortgage interest, charitable donations, and medical expenses that exceed a certain percentage of your adjusted gross income.
- Education Deductions: If you or a dependent are studying, it is possible to deduct education-related costs, such as tuition, books, and supplies.
- Health Care Deductions: These refer to medical expenses that are not covered by insurance. If these expenses exceed a certain percentage of your income, you can deduct them.
- Investment-Related Deductions: Expenses related to your investments, such as advisory fees or interest on investment loans, may be deductible.
The preparation of Taxes in Spanish It doesn't end with knowing and understanding these credits and deductions. It's about applying them strategically to your unique situation to maximize your tax benefits. Our team is ready to advise you and ensure you make the most of every tax opportunity.
We invite all people interested in optimizing their tax situation to visit us at our offices:
Charlotte: 3721 Eastway Dr, Charlotte, NC 28205. Monroe: 1503 E Franklin St, Monroe, NC 28112.
Do not hesitate to contact us with any questions or to schedule an appointment. We are here to serve you. See you soon!
