Tax credits and deductions for individuals
Tax credits and deductions change the amount of a person’s tax bill or refund. Individuals should know which credits and deductions they can claim and the documents they need to show their eligibility.
A tax credit reduces the income tax bill dollar-for-dollar that a taxpayer owes based on their tax return. Some tax credits, such as the Earned Income Tax Credit, are refundable. If a person’s tax bill is less than the amount of a refundable credit, they can get the difference back in their refund.
To claim a tax credit, people should:
- Keep records to show their eligibility for the tax credits they claim.
- Check now to see if they qualify to claim any credits next year on their tax return.
Deductions can reduce the amount of a taxpayer’s income before they calculate the tax they owe. Most people take the standard deduction, which changes every year according to inflation. The amount of the standard deduction depends on a taxpayer’s filing status, age and whether they’re blind and whether the taxpayer is claimed as a dependent by someone else.
Some people must itemize their deductions, and others may choose to do so because it reduces their taxable income more than the standard deduction. Generally, if a taxpayer’s itemized deductions are larger than their standard deduction, it makes sense for them to itemize.
At My Accounting Now we will help you file your taxes without any inconvenience and avoid any penalty with the IRS. Schedule a consultation with our team, we will clarify all your doubts. Call us at 786-228-8689 or send us an email to info@myaccountingnow.com