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Most people are filled with fear when it comes to doing their taxes. People start fearing what would happen if they filled in wrongly, and will there be penalties from IRS. What if you forget something? If you want to reduce your tax bill and your anxiety, why not use tax credit?

Tax credit is better than tax deduction, because tax credits reduces the amount of tax you pay. Taking on tax credits can reduce your bill, and in some cases they can even get you a refund.

Most people are not aware of tax credits and whether or not they qualify. These credits are perfectly legal, useful and are available to everyone who qualifies. The most common one is the earned income tax credit. If you’re single or married, with or without children, you could qualify for this credit.

The income limit is higher for married couples than for singles, but both has to meet the same requirements for qualification. In order to claim credit for children, they must be under eighteen years of age, or they’re students. The maximum amount of this credit is around $4500.

Do you have any other dependents that you care for, or pay for child care. There is a tax credit that covers these types of expenses. You can earn a credit of up to $2,100, depending on your income. If you want to take it further, the other expense that qualifies for dependents can be itemized for deduction, earning you further benefits.

If your children are in college, the lifetime learning credit is for you. This is specifically designed for parents who have paid valid education expenses. This award can be as much is twenty percent of $10,000. You can claim for tuition and fees, but not room and board or books. Parents can claim up to $2,000 per year.

Another credit that is available for parents is called HOPE. It’s especially used for qualified expenses like tuition and fees, but not room and board or books. The first $1,100 you spend is completely refundable. The second $1,100 is refundable at 50%, making the total tax credit amount to be $1,650.

Home owners can also claim credit for the purchase of a primary home which they live in or money for home improvements. The interest you’ve paid on your home can be claimed as a tax credit. The good thing about this credit is that it can be spread out up to three years, in case other credits make you go over the limit for one particular year.

Credits and deduction for taxes both have their uses, but generally people still prefer credits than deductions. Why not double check with your tax professional to see if you qualify for any credits.