Nancy is single and has two children. She files as head of household and usually itemizes deductions on her tax return. Nancy is eligible for a number of credits and deductions such as the child tax credit, a childcare credit, a retirement savings credit, mortgage interest and tax deductions, state and local tax deductions, and medical expense deductions, among several others. Nancy believes that all of her eligible deductions and credits will be beneficial, but she doesn$$t understand why some are called credits and some are called deductions.

Based on this scenario, address the following in one to two paragraphs:

Explain rationale for whether or not Nancy$$s eligible deductions and credits will benefit her.

Describe the difference between deductions and credits.

Explain why credits or deductions are more beneficial.