Searching for more tax savings? An ounce of credit can be worth a pound of deductions.
Getting credit when credit is due is always satisfying--especially if you're calculating your federal tax liability. While tallying up tax deductions trims your tax bill, earning tax credits saves you even more.
"A dollar's worth of tax credit reduces your tax bill by one dollar, but a dollar's worth of deductions [only] lowers your tax bill by whatever percent your tax bracket is. If you're in the 28 percent tax bracket, for example, a tax deduction saves you 28 cents,' explains Susan Jacksack, a small-business analyst with CCH Inc., a Riverwoods, Illinois, provider of legal, tax and business information.
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