Many people cringe when they think about their tax obligations, but what some people don't realize is that there are a wide variety of deductions and credits that can be applied to income taxes and reduce the overall amount owed.
Deductions and Credits
Tax deductions and tax credits can significantly reduce the amount of money owed on taxes, and can even increase the amount of a tax return in some instances. Standard deductions are available, but some tax payers choose to itemize their deductions. The best choice depends largely on which option will lower the tax payer's financial obligation when it comes time to file a return.
There are a wide variety of both deductions and credits, so it is certainly worth a tax payer's time to learn more about ways they can utilize to make taxes a little less painful. In many cases, deductions and credits can substantially reduce tax obligations, transforming a painfully high tax obligation into a return that is much more manageable.
Reduce Your Tax Obligation
Tax credits can vary from year to year. College students and homebuyers are examples of groups that have benefited from hefty tax credits in the past. Tax deductions are usually available in a variety of instances:
- For interest paid on a home mortgage
- For childcare expenses
- For some work related expenses
- For healthcare expenses
- For alimony paid
Keep in mind that both tax deductions and credits can change from one year to another, and not everyone is automatically eligible. Certain restrictions can apply, such as income level and other factors.
Research your options to find out how you can reduce your tax obligation or increase your return. Start right here with our list of articles. Then consider utilizing tax preparation software or contracting the services of a tax professional to maximize your chances of finding every deduction and credit available to you.