tax deductions & credits

tackling income taxes

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Finally, Tax Deductions and Tax Credits – yasss! You’ll want to get cozy with these two, because – long story short – they can help you pay less in taxes. Meaning you save $$. Let’s go!

tax deductions & credits

tackling income taxes

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  • Overview
  • Transcript
  • Resources

tax deductions & credits

tackling income taxes

Finally, Tax Deductions and Tax Credits – yasss! You’ll want to get cozy with these two, because – long story short – they can help you pay less in taxes. Meaning you save $$. Let’s go!

Tax Deductions & Tax Credits

We’re here to introduce you to some of your friends when it comes to taxes: Tax Deductions and Tax Credits. We’ll define both, give you some examples, and hopefully get you in the mindset to save some money.


What’s a deduction?

Tax deductions will knock your taxable income down so that you pay less taxes. Pretty cool, right?


Types of deductions

Deductions can range pretty significantly, from health care and medical expenses, to donating to charity, and more – but make sure you do your research so you know what you can claim as a deduction! And keep giving to those needy causes, but just know the donation has to be to a registered 501(c)(3) to count.


What’s a tax credit?

Tax credits are an amount that you can take out of the taxes you actually owe. These differ from deductions in that they are taken out after your taxes owed are calculated, whereas deductions reduce your taxable income. These are applied in nearly the last step of filing your tax return.


Types of tax credits

You can get credits in a handful of situations – if you’re a parent or caretaker, if you’re a student, if you invest in a retirement fund – these are just a few. Once you know how much you owe for the year, you can then apply the tax credit.

 

Overall, there are a lot of ways deductions and credits can help you out. Throughout the year, it’ll be a good idea to keep track of what might fall into each category so you can properly calculate deductions and credits when tax day creeps up on you.

 

Source(s): H&R Block

Transcript

Tax Deductions & Tax Credits

We’re here to introduce you to some of your friends when it comes to taxes: Tax Deductions and Tax Credits. We’ll define both, give you some examples, and hopefully get you in the mindset to save some money.


What’s a deduction?

Tax deductions will knock your taxable income down so that you pay less taxes. Pretty cool, right?


Types of deductions

Deductions can range pretty significantly, from health care and medical expenses, to donating to charity, and more – but make sure you do your research so you know what you can claim as a deduction! And keep giving to those needy causes, but just know the donation has to be to a registered 501(c)(3) to count.


What’s a tax credit?

Tax credits are an amount that you can take out of the taxes you actually owe. These differ from deductions in that they are taken out after your taxes owed are calculated, whereas deductions reduce your taxable income. These are applied in nearly the last step of filing your tax return.


Types of tax credits

You can get credits in a handful of situations – if you’re a parent or caretaker, if you’re a student, if you invest in a retirement fund – these are just a few. Once you know how much you owe for the year, you can then apply the tax credit.

 

Overall, there are a lot of ways deductions and credits can help you out. Throughout the year, it’ll be a good idea to keep track of what might fall into each category so you can properly calculate deductions and credits when tax day creeps up on you.

 

Source(s): H&R Block

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