by Blair Butters | Jan 24, 2020 | Uncategorized
When tax time rolls around and your bill starts adding up, tax deductions can be a big money saver. As long as you know what they are and how to take advantage of them. Here’s a quick guide to tax deductions and the three most common deductions to take. What is a Tax Deduction? Tax deductions lower a person’s tax liability by decreasing his or her taxable income. Deductions are typically expenses that the taxpayer incurs during the year that can be subtracted from his or her adjusted gross income to figure out how much tax is owed. The government uses tax deductions as a way to entice taxpayers to participate in community service programs for the betterment of society. This means taxpayers who are aware of state and federal deductions can benefit greatly from tax deductions while also supporting and giving back to their communities throughout the year. There are two ways to claim tax deductions: take the standard deduction or itemize deductions. Keep in mind that you cannot do both. Standard Deduction vs Itemized Deductions The standard deduction is a non-taxable portion of income that can be used to reduce your bill. As mentioned above, you can only take the standard deduction if you choose to not itemize your deductions. The standard deduction amount is calculated based on your filing status, age, whether you’re disabled, or are claimed as a dependent on someone else’s tax return. For 2019 taxes filed in April 2020, the standard deductions are: $12,200 for single taxpayers $12,200 for married taxpayers filing separately $18,350 for heads of households $24,400 for married taxpayers filing...
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