Is farm loss a tax credit or a tax deduction against ordinary income?

Is earned income tax credit an itemized deduction?

No. The earned income tax credit is a credit received by some based on their income and lawful dependent children. It is not a deduction of any kind.

Is mortgage interest taken off the top of income when reporting federal taxes?

Certain mortgage interest paid on a primary residence, meeting some other qualifications, is deductible against ordinary income - as an itemized deduction, if that is what you mean.

What does income tax credit mean?

An income tax credit is a dollar-for-dollar reduction in your tax, based on money you spent or invested in an item the government has decided is a social good, and which therefore is to be encouraged by the credit. It is different than an income tax deduction, which is a dollar reduction in your taxable income, but only a partial dollar reduction in tax.For example, let's say you spent $30,000 on solar panels for your home, for which your government will award a tax credit of 50% of the purchase price. In this case, your tax credit will amount to $15,000. If you owed $18,000 in tax in that tax period, $15,000 would be credited off, leaving you with only $3,000 in tax.A tax deduction of 50% of the purchase price would likely result in you're having to pay much more tax, because the deduction applies to your income, not directly to your tax. For example, suppose you made $100,000 in the year you bought the $30,000 in solar panels. The deduction would be $15,000, making your taxable income $85,000.How much do you save with the deduction? It's the difference in tax owing against the $100,000 versus the tax owing against the $85,000.If the marginal tax bracket is 30% starting at $50,000 income, you would pay 30% * ($100,000 - $50,000), or $15,000 in tax if you don't buy the solar panels. If you do buy the panels and take the deduction, your tax will be 30% * ($85,000-50,000), or $10,500 in tax. Thus your savings is $4,500.So you see, in this case a tax credit of $15,000 is MUCH BETTER than a tax deduction of $15,000. The credit is worth $15,000, while the deduction is worth only $4,500!

What is the difference between deduction for AGI and deduction from AGI?

The difference between deduction for AGI and deduction from AGI is that deduction for AGI reduces your total income before calculating your adjusted gross income, while deduction from AGI reduces your adjusted gross income after it has been calculated.

What is the difference between the lifetime learning credit and the tuition and fees deduction when it comes to educational expenses?

The main difference between the lifetime learning credit and the tuition and fees deduction is how they reduce your tax bill. The lifetime learning credit directly reduces the amount of tax you owe, while the tuition and fees deduction reduces your taxable income. This means the lifetime learning credit can potentially provide a greater tax benefit than the tuition and fees deduction.

What is the adjusted gross income before or after the standard deduction?

Adjusted gross income is calculated before the standard deduction is applied. The standard deduction is then subtracted from the adjusted gross income to determine the taxable income.

What is the difference between a Tax Deduction and a Tax Credit?

According to Yahoo Finance, "a credit reduces the amount of tax you owe; a deduction reduces the income on which taxes are assessed." See related links for more information on new tax credits for 2010.

Do you get tax credits if you pay child support?

No tax credit and no tax deduction on your income tax return for child support payments.

What is a voluntary income deduction?

Voluntar income deduction is money taken from your gross pay that you have control over.

What is the difference between a foreign tax credit and a foreign tax deduction?

A foreign tax credit reduces the amount of tax you owe dollar for dollar based on the foreign taxes you've paid. A foreign tax deduction reduces your taxable income, which can lower your overall tax bill but not as directly as a credit.

What are tax deductions and credits?

A deduction reduces the amount of income that is subject to tax, and a credit represents a direct reduction in the amount of tax liability

Can you claim taxes of grocery receipts?

If you itemize deductions on your federal income tax return, you have the choice of claiming a deduction either for state income taxes or state sales taxes (but not both). Sales taxes would include those for groceries. Note that this is a deduction, not a refund or credit.