Tax Credits

Make it a practice to take advantage of every tax credit and deduction available to you. Credits provide a dollar-for-dollar reduction in income tax liability; that is, a $1,000 credit actually saves you $1,000 in taxes.

Deductions, on the other hand, lower your taxable income. For example, if you are in the 22% tax bracket, a $1,000 deduction saves you $220 in tax, which is $780 less than the savings with a $1,000 tax credit.

Child Tax Credits

Parents with dependent children under age 17 are entitled to claim a tax credit of up to $2,000 and up to $1,400 can be refundable through 2018.

The credit starts to phase out for taxpayers with adjusted gross income (AGI) of more than $200,000 for single filers and $400,000 for joint filers.

Those who adopt a child can receive a tax credit of up to $13,840 in 2018. Those adopting a child with special needs may claim a $13,840 tax credit in the year the adoption is completed, even if they do not have qualified adoption expenses.

Both of these credits are subject to phase out depending on your income level. To see if you qualify, click here.