Tax credits are amounts that you can subtract from the amount of tax you owe.
There are two types of tax credits.
The tax credits for individuals can also be divided as:
- Family and dependent credits
- Income and savings credits
- Homeowner credits
- Health care credits
- Education credits
Individual tax deductions are amounts that you subtract from your income before you figure out the amount of tax you owe.
Like tax credits, tax deductions can be of different types:
- Work related deductions
- Itemized deductions (included here are property taxes and charitable donations)
- Education deductions (student loan interests are classified as education deductions)
- Health care deductions
- Investment related deductions
More details can be found on the Internal Revenue Service website
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If you accept a loan or credit card offer of zero interest for “x” number of months, make sure you pay the balance in full by the end of the “zero interest” period or you will be charged prorated interest. Remember to read the small print and understand the terms and conditions that come with the “sweet” deal before you sign-up for it.
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Doctors and medical offices don’t report your unpaid bills to the credit reporting agencies. They send them to bill collection agencies and they report your debt. Once reported, the unpaid medical debt may negatively impact your credit score making it drop 50 to 100 points. Whether paid or not, the medical debt reported will stay on your credit report for up to 7 years.