|
Tax Deduction is a deduction from the gross income to calculate taxable income. The gross income is the total income from all sources. From the gross income you deduct allowable tax deductions, tax credits, etc and the resulting amount is the taxable income. There are many rules for taking the tax deductions and credits. A good tax software or an experienced tax professional can help you identify the allowable deductions. Once you calculate taxable income, you can find the total tax by looking in the tax table in the IRS publication 17. So, if you maximize your tax deductions, you can maximize your tax refund or minimize your tax bill.
Tax deductions are not limited to federal taxes. Many states and cities allow additional tax deductions and some of them don't allow a deduction taken in the federal taxes and require you to pay state and local taxes.
A wise tax payer should take advantage of all legally allowed Tax Deductions. Federal tax code is spread over tens of thousands of pages and many of them refer to some form of Tax Deductions. Reading through all those pages would not make sense to an average person. Using a good tax software provide some level of help to identify common tax deductions.
If you have a unique situation, then using even the most advanced tax software may not help to identify all applicable tax deductions. Contact a qualified tax professional like a Certified Public Accountant, an Enrolled Agent or a Tax Attorney and it will be well worth your time and money.
Related Articles:
|
|
Last Updated ( Tuesday, 04 December 2007 )
|
