Your taxes,
done right.

A tax write-off, also known as a tax deduction, is an expense that is legally allowed to be subtracted from your taxable income on your tax return. This means that it can reduce the amount of taxes you owe by lowering your taxable income. Tax write-offs are available to individuals, self-employed individuals, small businesses, and corporations.

There are two types of tax write-offs: deductions and credits. Deductions lower your taxable income by a certain amount, while credits are a dollar-for-dollar reduction of the taxes you owe. For example, if you are in the 24% tax bracket and you have a $100 deduction, it will reduce your taxes by $24. On the other hand, a $100 credit will reduce your taxes by $100.

Individuals can claim deductions and credits on their tax return. The standard deduction, which is a set amount based on your filing status and income, is a common deduction that is available to all taxpayers. In addition, there are various credits available to individuals, such as the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Credit.

Self-employed individuals, small businesses, and corporations can claim deductions for expenses that are directly related to conducting their business. These can include office supplies, travel expenses, and employee salaries.

It's important to note that not all expenses are considered tax write-offs. In order to be eligible, the expense must be considered a legitimate business or personal expense and must be properly documented. It's also important to remember that the tax write-off must be claimed in the same tax year in which the expense was incurred.

One mistake that people often make when claiming tax write-offs is failing to keep proper documentation. It's important to keep receipts and other documentation for all of your expenses in case you are audited by the Internal Revenue Service (IRS). Another mistake is claiming expenses that are not eligible for a tax write-off, such as personal expenses or expenses that are not directly related to your business.

In conclusion, tax write-offs can be a valuable tool for reducing your taxable income and lowering the amount of taxes you owe. It's important to understand the difference between deductions and credits, as well as the eligibility requirements for each. By properly documenting your expenses and only claiming eligible write-offs, you can ensure that you are taking advantage of all available tax benefits.