There are two ways to reduce the amount of taxes you owe to the U.S. government: through a tax deduction or a tax credit. A tax deduction reduces the amount of taxable income you have to claim on your tax return. A tax credit, on the other hand, is a direct, dollar-for-dollar reduction in the amount of taxes that you owe. Therefore, if you get a $300 tax credit, you will owe $300 less in taxes.
Things You'll Need
- Most recent W-2 or 1099 Form
- 1040 Form for the current year
Research available tax credits on the IRS website. The tax credits available in October 2009 are earned income credit, child and dependent care credit, adoption credit, excess Social Security and RRTA tax withheld, retirement savings contribution credit, and a first-time home buyer tax credit.
Print out the applicable form for each tax credit earned. Gather all documentation it requests and fill out the form completely.
Fill out your Form 1040 completely. Throughout the form, it will ask you to fill in the amounts of your credits. This will either reduce the taxes that you owe or increase your refund.