Hello and welcome to Money Girls Quick and Dirty Tips for a richer life.

I'm your host Laura Adams. In the last episode I talked about some tax exemptions. In today's show I'm going to give you some tips on ways to lower your taxes by taking advantage of

tax credits. A tax exemption and a tax credit both save you money but they do it in

different ways. An exemption or deduction reduces

your taxable income before taxes calculated on that amount. But a tax credit

reduces the total amount of tax you must pay.

Since a tax credit allows you to subtract taxes dollar for dollar,

it's even better than a deduction.

So I want to make sure you begin to think about every tax

credit you can take for the 2008 tax year. When it comes to tax deductions,

everyone is entitled to what's called the Standard

deduction. For 2008 the Standard deduction is 5,450 for singles

as well as for married people filing separately.

For those who are married and filing jointly, it's 10,900,

and for heads of household, it's 8,000.

You get to choose between taking the standard deduction or adding up all your individual

deductions and using that amount.

You can use the amount that's higher and the most beneficial to you.

I recommend going through the process of calculating your potential deductions

because the total could be higher than you think.

According to the IRS, two out of three taxpayers take the standard deduction

rather than itemizing their deductions like mortgage interest,

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