A tax credit is a benefit that a taxpayer can
qualify for on their tax return that is similar to a
tax deduction. A tax
credit will increase an airline pilot or flight
attendant's tax refund or decrease the
crewmember's tax liability by the amount of tax credit, and in that way it differs from a tax deduction.
Because a tax credit is a dollar-for-dollar conversion, a $3000 tax credit
reduces a taxpayer's tax liability by $3000, a $5000 tax credit reduces the tax
liability by $5000. It does not depend on the
tax bracket, though it
can be affected by the
AMT
(alternative minimum tax).
Examples of tax credits are: Credit for child and
dependent care expenses, credit for the elderly or disabled, education credit,
etc.
Tax credits can and often do change from year-to-year, therefore reference
publication 1040 or consult a
tax preparer about
the current tax credit changes for each given year.
Some examples of tax credits include:
