When it comes to doing your taxes, people are often filled with fear. What if I do them wrong? What will the IRS do to me? What if I forget something? One way to reduce our tax bill and reduce our anxiety is to use tax credits.

A tax credit is better than a tax deduction. A tax credit reduces the amount of the tax bill. If you owed $2,000, tacking on some tax credits can reduce your bill to $0. Enough tax credits can even net you a refund when you thought you were going to have to write a hefty check.

Most people don’t know that tax credits are available and that they qualify for them. These credits are legal and useful. The one that is most common is the earned income tax credit. This tax credit is available to qualifying singles and married couples with or without children.

Married couples are allowed to earn more than singles but both must meet the same requirements for qualification. The children must be under eighteen years of age unless they are students continuing their education. The maximum amount of the credit is around $4,500.

Have you been paying for child care or care of another dependent? There is a tax credit that covers the money that was paid. Depending on your income, a taxpayer with qualifying expenses can earn a tax credit of approximately $2,100. Beyond the credit, other expenses that qualify for dependents can be utilized to itemize deductions and further benefit the taxpayer.

For children in college, parents can claim the lifetime learning credit. It is available for parents who have paid valid education expenses. The maximum amount of the award is twenty percent of as much as $10,000. The expenses that count towards the credit are those spent on tuition and fees, but not room and board or books. That amounts to $2,000 per year that parents can claim.

The HOPE credit is also available for parents. It is used for qualified expenses such as tuition and fees but not room and board or books. The first $1,100 is 100% refundable. The second $1,100 is refundable at fifty percent. The total tax credit amounts to $1,650.

A mortgage interest credit may be available for homeowners. Taxpayers can qualify for money to purchase a primary home for themselves or for home improvements as a part of a state program. The interest that they have paid on their home can be claimed as a tax credit. The good thing about this credit is that it can be spread out over as many as three years if other tax credits push the tax payer over the limit for a certain year.

Tax credits and deductions are both helpful, but credits are still more favorable than deductions. Check with your tax preparer to see which tax credits you qualify for.