What are some legal methods to reduce taxes owed, such as deductions and credits?
What are some legal methods to reduce taxes owed, such as deductions and credits?
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One of the most common ways to legally reduce taxes owed is through deductions. Deductions are subtracted from your taxable income, resulting in a lower total tax liability. Common deductions include those for mortgage interest, state and local income or property taxes, contribution to charities and retirement savings accounts. Other legal methods to reduce taxes include credits, which are based on particular activities or expenses. Popular credits include the child tax credit and the saver's credit for retirement contributions.
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What are some legal methods to reduce taxes owed, such as deductions and credits?
user
Some legal methods for reducing taxes owed include taking deductions and credits. Deductions are reductions taken from your overall income that may lower your taxable income, leading to a lower total tax bill. Credits are special payments granted by the government that reduce the amount of money you owe. Examples of credits include the Earned Income Tax Credit and the Child Tax Credit.
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