The Bottom Line
Small business is important to Central Oregon, and to Mid Oregon. Find tips and resources for business, and information about Mid Oregon’s commercial services and business members.
What’s the Difference Between a Tax Credit and a Tax Deduction?
At Mid Oregon Credit Union we realize that properly handling income taxes helps make our members financially successful. For those of us who have done our taxes for years, we have many of the tax basics down. But what about those who find themselves newly facing the tax challenge? Understanding tax concepts and terms can be important. One question, “what’s the Difference Between a Tax Credit and a Tax Deduction?”, is significant.
TurboTax Answers The Question
We’re glad to be partnered with TurboTax through the I Love My Credit Union Rewards program, where they do the heavy tax preparation lifting. If you’re not using TurboTax, the difference between a tax credit and a tax deduction is important to understand.
“Just write it off.”
“Go ahead and deduct it.”
“I think there’s a tax credit for that.”
Although you might have heard or even uttered one of the sentences above, have you ever wondered what it actually means? While both tax deductions and tax credits can save you a significant amount of money on your taxes, they work in significantly different ways.
What is a Tax Deduction?
A tax deduction is a result of a tax-deductible expense or exemption which reduces your taxable income. A common tax deduction on your federal income tax return is the standard deduction. An example of how this works: If your income was $50,000, your standard deduction (if single or married filing separately) would reduce your taxable income by the 2018 standard deduction of $12,000, so your taxable income would now be $38,000.
What is a Tax Credit?
Unlike tax deductions, tax credits are subtracted from your tax liability (not taxable income). A common tax credit is the Child Tax Credit. If you have a qualifying child, you can take a credit of up to $2,000 per child against the taxes you owe in 2018. If you have a total federal income tax liability of $3,500, the Child Tax Credit for one child would reduce that tax liability to $1,500.
Is a Tax Deduction Better Than a Tax Credit? Is a Tax Credit Better Thank a Tax Deduction?
If you were ever faced with a hypothetical choice between a $100 tax deduction and a $100 tax credit, you would most likely prefer to receive the credit. Unlike a tax deduction, a $100 tax credit reduces your tax dollar-for-dollar ($100). On the other hand, a tax deduction reduces your taxable income by $100. The resulting amount of tax you save depends on your marginal tax bracket (in everyday language: your tax bracket). If you are in the 24% tax bracket in 2018, a $100 tax deduction reduces your taxes by $24. On the other hand, a $100 credit would reduce your taxes by $100.
TurboTax Has You CoveredDon’t worry about trying to figure out which tax credits or deductions you should take, or if you should itemize or take the standard deduction. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for based on your answers to get you the biggest tax refund. As a credit union member, you can save up to $15 on TurboTax federal products. Click here to access TurboTax and your savings! |
 |
Interest in learning more ways to save on your taxes? Talk to our Mid Oregon Credit Union team and Mid Oregon Wealth Management to learn more!
Is Your Best Auto Loan Better Than 0%?
When it comes to auto loans, a 0% interest rate is a head-turner, but it’s not always the best deal. It’s not always your best auto loan.
Car dealerships generally advertise 0% offers in the summer when they’re looking to make room in the showroom for newer models. The offers come from the financing arms of the large auto manufacturers, which unlike traditional lenders profit directly off the sale of the car and don’t necessarily need the interest revenue.
The New York Times reports that only about 10% of consumers actually qualify for 0% interest loans, which require pristine credit—usually a FICO score of 720 or higher. And the loans typically are reserved for a limited number of models and are not available if you’re shopping for a used car, which obviously tend to cost less than newer models.
These 0% loans often are paired with shorter-term loans, which cost you less overall but mean a higher monthly payment. Before you head to the dealership, to get your best auto loan keep these points in mind:
* Look at all available deals. Check for other offers, such as cash back. If you can get a rebate–which lowers the overall price of the car–paired with a low-interest loan, it may save you more than the 0% financing. So be sure to crunch the numbers with an online calculator, such as the one on Mid Oregon’s website.
* Negotiate the price. Before you get to the interest rate, finalize a sale price and stick to it. Don’t feel pressured to accept expensive add-ons. Once the sale price is established, then talk about financing.
* Get preapproved for a loan at your credit union. Heading to the dealership with a firm offer in hand will give you a point of comparison and puts you in a stronger negotiating position. Credit unions, as not-for-profit financial cooperatives, offer competitive rates.
To get started on your pre-approval, call Mid Oregon at (541) 382-1795, email to info@midoregon.com, inquire online or visit a Mid Oregon branch in Central Oregon. You can also get started with our online loan application.
Celebrating a Year of Innovation and Growth
2019 a Great Year for Mid Oregon!
2019 wrapped up as one of the best years in our 63-year history. Given our strong performance in the past several years, that bar was a high one to clear, and our team delivered! In addition to exceeding our goals for
loan growth and building more meaningful member relationships, we also successfully completed multiple projects to improve our core systems, added new services, and announced some new initiatives to meet our community’s financial needs.
Home Loan Department Launch
For instance, in late 2019 we launched our new Home Loans department, enabling Mid Oregon to provide members with the same great in-house service on their home loans and investment properties that they’re used to receiving on their other loans. As part of this expansion, we also announced a first-of-its-kind product to help address the shortage of local housing for working families. Our Workforce Housing Loan Program helps those seeking to provide rental properties at affordable rates to receive discounted financing on their loans.
Samsung Pay™ & Apply Pay™ Available
We’ve barely cracked the cover on 2020 and already we’re hard at work on a more innovations to make your financial life even easier. You can now use your Mid Oregon debit and credit cards with Samsung Pay™ or Apple Pay™ mobile wallets, providing additional convenience and security when you shop, dine, and travel.
New Digital Banking Service
We’re also delighted to announce that our new Digital Banking service is scheduled to roll out in mid-April. It features the same login and experience whether you use the desktop, mobile, or tablet version, and offers any of the best-in-class features you’ve been asking for.
New Branch in Sisters
As much as our members embrace technology, we also know you appreciate visiting a branch and working with our talented team in person. That’s why we’re also delighted to announce the groundbreaking of our upgraded Sisters branch in Spring 2020. This new full service branch, located between St. Charles Clinic and McDonald’s just off Highway 20, will be designed with the convenience and access of our growing membership in Sisters in mind.
With 2019 a Great Year for Mid Oregon, we can’t wait to see what else 2020 brings. Thank you for being part of the Mid Oregon family.
Bill Anderson