| Tax deduction basically refers to the amount that is | | | | Earned income credit is not an income but it does |
| deducted from your gross income, which in turn | | | | offers lot of benefit to us. |
| reduces the taxable income. These deductions will | | | | These deductions are mainly aimed at encouraging |
| depend upon an individual's tax return. The taxpayer | | | | various initiatives like home ownership, |
| need not pay any tax on expenses which are tax | | | | entrepreneurship, environment protection, medical |
| deductible and it includes medical expenses, donations, | | | | spending etc. These deductions are sometimes utilized |
| brokerage fee and legal fees etc. Although | | | | for tax evasion and thus, require a small degree of |
| investments are tax deductible, the commission or the | | | | legal complexity. Since it is only income that is taxed, |
| brokerage fees are not so considered. Apart from | | | | thus majority of the companies separate revenue |
| standard deductions, you can also file additional tax | | | | from expenses in the accounts. |
| deductions. | | | | The increasing number of kinds of tax deductions |
| Even if you don't own any tax on your tax return to | | | | have lead to too much of complexity. This is why |
| the IRS or you have no tax withheld then you can still | | | | majority of the government these days are calling for |
| try to obtain credit. Some people may get money | | | | simplification of tax structure. Even though tax |
| back because this credit is a refundable credit. It is | | | | deductions can bring a great relief to many people, |
| important to note here that if you try to fraudulent | | | | these are not applicable to everyone. An individual who |
| claim your tax credit then you earned income credit will | | | | is earning a huge sum of money is not eligible for any |
| be disallowed for a period of ten years. | | | | tax deductions. |
| The income limitations eligibility for earned income | | | | The tax deduction as well as tax structure widely |
| credits depend upon marital status, family size as well | | | | differs from country to country. In some countries |
| as income. This credit can be for part time, full time | | | | taxes are higher for rich people and lower for poor |
| and for single or married people. In some cases | | | | people, whereas in other countries the situation is just |
| childless workers can also claim this credit. | | | | vice-versa. |