"Below the line..."
“…not above the line.” This is what our founder used to tell me all the time. It’s what she told her first clients, both families, and businesses. You want to have items “below the line”! The line euphemistically separates the income that you have from the tax liability that you owe. While tax deductions are great, tax credits may even be better! Joan knew this as she explained….”What’s the difference between tax deductions and tax credits?”
What's the difference Between Deductions and Credits?
How Credits and Deductions Work
When you claim federal tax credits and deductions on your tax return, you can change the amount of tax you owe.
- Deductions can reduce the amount of your income before you calculate the tax you owe.
- Credits can reduce the amount of tax you owe or increase your tax refund, and some credits may give you a refund even if you don’t owe any tax.
Deductions for Individuals & Families
Above The Line
Adjusted Gross Income AFTER deductions.
Tax liability BEFORE credits.
Below the Line
Credits for Individuals & Families
Child Tax Credit
- Advance payments of the Child Tax Credit
- Reconcile advance payments of the Child Tax Credit on your 2021 tax return
- Does my child/dependent qualify for the Child Tax Credit or the Credit for Other Dependents?
- Child Tax Credit and Credit for Other Dependents
- Publication 8812, Credits for Qualifying Children and Other Dependents
Dependent Care Credit
Tax Credit with Dependents
Other Child Credit
2021 Recovery Rebate Credit
- To find out if your dependents qualify, see Questions 7-9 in Recovery Rebate Credit Eligibility FAQs
- Recovery Rebate Credit