Tax Deductions and Credits can both benefit you to lower your tax bill or have a refund using the credits that you may have.
We need to distinguish the two concepts first.
Tax Deductions lowers your taxable income while Tax Credits can decrease the number of your tax liabilities and can translate to a tax refund in the end.
With the right planning, it’ll give more feedback on what areas you can save on and be proactive about in practicing it in the long run.
Since no individual has the same tax situation, we’ll deal with hypotheticals and basic differences in the benefits.
Standard Deduction Table
To understand more about the benefits of both use the standard deductions on the tax brackets below depending on your income. It Will be based on your filing status and income. See below:
| Status on filing | 2019 Tax Year |
| Single | $12,200 |
| Married, filing jointly | $24,400 |
| Married, filing separately | $12,200 |
| Head of Household | $18,350 |
| Widower | up to $24,400 |
These are the standard deductions you can take advantage of and lower your taxable income.
We can help you determine which deduction is beneficial for you so you pay less in taxes or have a refund in the end.
Itemized Deductions
There are a number of itemized tax deductions that you can qualify for, therefore cutting your taxable income and pay less in taxes.
Since itemized deductions are different to each individual. Tax professionals can stir you to the right option to maximize the savings.
Tax Deductions and Credits, the Big Picture
Credits are given to individuals with major life changes, for example getting married, going back to college or even when you need to take care of an elderly parent.
Deductions are basically lowering your taxable income based on the number of qualified deductions you will qualify for.
When it’s time to file your taxes, all of these benefits could significantly lower your taxes or even have a refund in the end.
Get to know your tax professional and take note of the deductions and credit you qualify and plan the next year to relieve you of stress during tax time.
If you have questions about your tax status changing, you can call us, message us on Facebook or let us know when you are dropping by.
