should that tax credit have been nonrefundable your financial benefit would have been limited to zero taxes owed you wouldn t receive a refund for the remaining 500 of tax credit 
common tax creditshere are some details about several of the common tax credits mentioned earlier for 2022 the child and dependent care credit for expenses is nonrefundable this credit which requires irs form 2441 helps individuals and couples reduce the costs of care for children younger than 13 it s available to those who have to arrange for this care so that they can work or look for employment 28you may also receive the credit if you care for a spouse or a dependent of any age who cannot care for themselves 29for 2022 you may claim up to 3 000 for the care of one dependent or up to 6 000 for two or more the credit ranges from 20 to 35 based on your income 30to qualify for this tax credit your filing status must be single married filing jointly head of household or qualifying widow or widower with a qualifying child 31the lifetime learning credit can help offset the costs of any years of postsecondary education and whether or not you re earning a degree the tax credit can be 20 of up to 10 000 in qualifying expenses related to education or 2 000 for an eligible taxpayer their spouse or their dependent for 2022 the full credit can be claimed if annual income is 80 000 or less for single filers or 160 000 or less for married couples filing jointly 3233the retirement savings contributions credit was created to encourage low and moderate income taxpayers to save for retirement it can offset part of the first 2 000 that workers contribute to individual retirement accounts iras 401 k plans and certain other workplace retirement programs 34it applies to eligible contributions to retirement plans you must be at least 18 years old and not a full time student during the year also you may not be claimed as a dependent on someone else s tax return 35for 2022 the credit is available to those with maximum annual incomes of 34 000 for single filers 51 000 for heads of household and 68 000 for married couples filing jointly the maximum credit is 1 000 for individuals or 2 000 for couples 34tax credit vs tax deductionboth tax credits and tax deductions are a welcome feature of tax time for any taxpayer they both reduce money owed to the government in a given year however they differ in how they do so a tax credit reduces the specific amount of the tax that an individual owes for example say that you have a 500 tax credit and a 3 500 tax bill the tax credit would reduce your bill to 3 000 you won t be able to make the most of nonrefundable tax credits that reduce the amount of taxes you owe to zero and still have dollars left over that amount isn t refundable 2refundable tax credits do provide you with a refund if they have money left over after reducing your tax bill to zero as a result they re considered more valuable than nonrefundable tax credits there are also certain tax credits that result in a refund even if you had no tax liability 36you must meet certain criteria for tax credits so be sure to check with a tax advisor or the information provided by the irs 36a tax deduction reduces the amount of your income that is subject to taxation for example the contributions that you make to a 401 k in a particular year reduce your taxable income by the total amount contributed 2you can choose to take the standard deduction offered to every taxpayer for a single filer it s 12 950 for 2022 and 13 850 in 2023 or you can itemize your deductions it s one or the other so be sure to consider whether individual deductions could save you more than the standard deduction before preparing your taxes 37bear in mind that you ll have to provide documentation for the deductions you itemize whereas the standard deduction is automatic 38here s a quick comparison of the financial benefit offered by a tax credit vs a tax deduction 