You are in the 20% marginal tax bracket. What is the most beneficial option for reducing your taxes?

Taking the $600 tax credit is the most beneficial option for reducing taxes because tax credits directly reduce the amount of tax owed, dollar for dollar. In this case, a $600 tax credit would decrease your overall tax liability by that precise amount, making it a straightforward and effective way to save on taxes.

For someone in the 20% marginal tax bracket, deductions reduce taxable income rather than directly reducing the amount owed. For example, if you were to deduct $2,000 as an adjustment to income, the tax savings would only be 20% of that amount, which totals $400. Therefore, the financial benefit from a deduction is less impactful compared to a tax credit.

Choosing to apply the standard deduction would not provide a direct benefit to your tax situation like a tax credit does. While it does reduce your taxable income, it wouldn’t have the same immediate effect on your tax owed as the credit.

Claiming all eligible deductions can be beneficial, but it's important to note that, similar to taking a standard deduction, the actual tax reduction will not exceed the benefit of the tax credit. In summary, the direct reduction of tax liability through a credit makes it the most advantageous option for someone seeking to minimize taxes effectively.