What is a Tax Deduction

Here is the technical term for Tax Deduction:


Tax deduction is a reduction of income that is able to be taxed and is commonly a result of expenses, particularly those incurred to produce additional income.


 

To make this easy think of it this way:

Let’s say you can be taxed at 10% a year.

You made $1000 in a year. All of that will be taxed at your 10%

Wait, you have $300 Deduction.

This means you will only be taxed on $700 of what you made.

Isn’t as great as a Tax Credit but, it is good know and take advantage of.

 

 

2 Replies to “What is a Tax Deduction”

Leave a Reply