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Learning Your Tax Facts

Dealing with taxes may not be at the front of everybody’s minds, but it is something that most deal with or associate with on a daily basis. Whether it is the amount taken out of your paycheck every week, the additional charge to your groceries at the store, or the road construction that is improving the roads, taxes make an impact in our lives on a regular basis. Even so, there are some people that don’t even know the basic tax terms that are frequently used. Become familiar with these terms and how they will influence your finances.

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Tax credits

 

This is a term that gets used frequently. This works the same as getting a credit in a store or other location. These are valuable to tax payers because they will reduce the amount you owe instead of lowering the amount of taxed income you have. With enough credits, you can end with a refund.

 

Tax deductions

 

These are deductions you are allowed to make to your adjusted gross income as per the IRS. These deductions are higher for those with lower incomes, or can be based on a number of other factors. Some of the most common factors that are taken into consideration are student loan interest that has accrued, moving costs, and more. Find out what of your expenses can be tax deductions.

 

Standard deduction

 

There is a fixed amount set that taxpayers can take out of their income. It is an option for anybody who is filing their taxes. On account of inflation, these amounts change from year to year, but remain constant across the board during that year. This amount should be listed on the three tax forms received at the beginning of tax season.

 

Itemized deduction

 

These are the expenses from the year that can be reduced from your adjusted gross income to reduce your income amount to calculate taxes Things such as mortgage interest, charitable contributions, and medical expenses can be accounted for here.  These should be made in detail, showing each item individualized.

 

Filing your taxes may seem difficult, but there are methods that can be done to not only accomplish the task, but find ways to save you money. If you find yourself in a bad situation because of a problem with filing, contact us at Michelle Turpin. We can help get you back on track, mending the problem that may have arisen.

 

By +Cassie Costner