{"id":31941,"date":"2020-10-08T15:25:06","date_gmt":"2020-10-08T19:25:06","guid":{"rendered":"https:\/\/www.theamateurfinancier.com\/blog\/?p=31941"},"modified":"2021-06-28T11:56:16","modified_gmt":"2021-06-28T15:56:16","slug":"tax-deductions-101-what-they-mean-for-you","status":"publish","type":"post","link":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/","title":{"rendered":"Tax Deductions 101: What They Mean for You"},"content":{"rendered":"<p>About <a href=\"https:\/\/www.cnbc.com\/2019\/03\/19\/90-percent-of-americans-couldnt-answer-this-straightforward-tax-question.html\">90% of Americans<\/a> don\u2019t understand the tax code. You could be paying more in taxes than you should simply because you don\u2019t know how taxes work.<\/p>\n<p>The way to limit your tax burden is through tax deductions and tax credits. You are likely to have tax deductible expenses if you have a home or own a business.<\/p>\n<p>What does tax deductible mean and how can that impact your taxes? Keep reading to discover important information that can help you save money on your taxes.<\/p>\n<h2><strong>Tax System Basics<\/strong><\/h2>\n<p>The way our tax system works is that you pay a percentage of your income towards federal and state income taxes. The United States has a progressive tax system, so the percentage of income taxes paid depends on your earnings and your filing status.<\/p>\n<p>You also pay 6.2% of your earnings to Social Security and 1.45% to Medicare. These are social programs that you\u2019ll be able to receive benefits from when you are 65 or older.<\/p>\n<p>The taxes are withheld from your paycheck according to the IRS withholding table and how many exemptions you put down on your W-4 Form.<\/p>\n<p>The easiest thing to do is to <a href=\"https:\/\/us.icalculator.info\/salary-calculator\/new-york.html\">take a look<\/a> at a calculator that can estimate your withholdings for you.<\/p>\n<h2><strong>What Does Tax Deductible Mean? <\/strong><\/h2>\n<p>When you file your taxes, you reconcile how much you already paid in taxes from your earnings and tax credits and deductions. You\u2019re then taxed based on your Adjusted Gross Income (AGI).<\/p>\n<p>The lower your AGI, the less you\u2019ll pay in taxes. Ideally, you want to have as many tax deductible expenses as you can.<\/p>\n<p>Here\u2019s an example of a tax deductible expense. You earn $70,000 a year. You have qualified business expenses that total $15,000. Your AGI becomes $55,000.<\/p>\n<p>You have a choice when you file your taxes. You either take the standard deduction, or you can itemize your deductions, which you would do on a Schedule A.<\/p>\n<p>In the Tax Cuts and Jobs Act of 2017, the standard deduction was doubled. For the year 2020, the standard deduction is $12,400 for single tax filers and those married filing separately. Married couples that file jointly have a $24,800 standard deduction.<\/p>\n<p>Your personal tax deductions would have to be more than the standard deduction to make it worthwhile.<\/p>\n<h2><strong>Tax Deduction vs. Tax Credit<\/strong><\/h2>\n<p>What is a tax credit and how does that differ from a tax deduction? As you just learned, a tax deduction will lower your AGI and can put you in a lower income tax bracket.<\/p>\n<p>A tax credit is applied to the amount of taxes you owe. For example, if you owed $5,000 in income taxes and you received a $1,000 tax credit, your tax bill is lowered to $4,000.<\/p>\n<p><span style=\"color: #333333;\">There is a wide range of different tax credits in the USA, but one of the most commonly referred to is the research and development (R&amp;D) tax credit which is a US government-sponsored tax incentive that rewards companies for conducting research and development activities within the United States &#8211; you can learn more about this tax credit by taking a look at this <a href=\"https:\/\/kruzeconsulting.com\/research-and-development-tax-credit-us\/\">r&amp;d tax credit study<\/a> on the Kruze Consulting website.<\/span><\/p>\n<h2><strong>The Importance of Learning the Tax Code<\/strong><\/h2>\n<p>Understanding the tax code has its advantages. Knowing basic terms like tax credits and tax deductible can make a huge difference in your tax bill.<\/p>\n<p>What does tax deductible mean? It means you can subtract qualified expenses from your total earnings.<\/p>\n<p>For more smart financial tips, head over to the home page of this site.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>About 90% of Americans don\u2019t understand the tax code. You could be paying more in taxes than you should simply because you don\u2019t know how taxes work. The way to limit your tax burden is through tax deductions and tax credits. You are likely to have tax deductible expenses if you have a home or [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":31943,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[68],"tags":[],"class_list":["post-31941","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-taxes","wpautop"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Tax Deductions 101: What They Mean for You | The Amateur Financier<\/title>\n<meta name=\"description\" content=\"Tax deductions are common talk around tax season, but what does tax deductible mean for you, really? Here&#039;s what you need to know!\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Roger\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/\"},\"author\":{\"name\":\"Roger\",\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/#\\\/schema\\\/person\\\/08574c7c42732c7cc4346dc3fec0e881\"},\"headline\":\"Tax Deductions 101: What They Mean for You\",\"datePublished\":\"2020-10-08T19:25:06+00:00\",\"dateModified\":\"2021-06-28T15:56:16+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/\"},\"wordCount\":593,\"image\":{\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/wp-content\\\/uploads\\\/2020\\\/10\\\/taxes.jpg\",\"articleSection\":[\"Taxes\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/\",\"url\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/\",\"name\":\"Tax Deductions 101: What They Mean for You | The Amateur Financier\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/wp-content\\\/uploads\\\/2020\\\/10\\\/taxes.jpg\",\"datePublished\":\"2020-10-08T19:25:06+00:00\",\"dateModified\":\"2021-06-28T15:56:16+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/#\\\/schema\\\/person\\\/08574c7c42732c7cc4346dc3fec0e881\"},\"description\":\"Tax deductions are common talk around tax season, but what does tax deductible mean for you, really? Here's what you need to know!\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/#primaryimage\",\"url\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/wp-content\\\/uploads\\\/2020\\\/10\\\/taxes.jpg\",\"contentUrl\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/wp-content\\\/uploads\\\/2020\\\/10\\\/taxes.jpg\",\"width\":2000,\"height\":1414,\"caption\":\"tax form with callculator and glasses\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/tax-deductions-101-what-they-mean-for-you\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Tax Deductions 101: What They Mean for You\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/#website\",\"url\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/\",\"name\":\"The Amateur Financier\",\"description\":\"Thoughts on Money, Investing and Life\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/#\\\/schema\\\/person\\\/08574c7c42732c7cc4346dc3fec0e881\",\"name\":\"Roger\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/c306e77aa0a82a330bf778f6c4f8fe4742257b9c7d461be78b15a422b0bab592?s=96&d=blank&r=pg\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/c306e77aa0a82a330bf778f6c4f8fe4742257b9c7d461be78b15a422b0bab592?s=96&d=blank&r=pg\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/c306e77aa0a82a330bf778f6c4f8fe4742257b9c7d461be78b15a422b0bab592?s=96&d=blank&r=pg\",\"caption\":\"Roger\"},\"sameAs\":[\"https:\\\/\\\/www.theamateurfinancier.com\\\/blog\\\/\",\"https:\\\/\\\/x.com\\\/https:\\\/\\\/twitter.com\\\/amateurfinance\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Tax Deductions 101: What They Mean for You | The Amateur Financier","description":"Tax deductions are common talk around tax season, but what does tax deductible mean for you, really? Here's what you need to know!","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/","twitter_misc":{"Written by":"Roger","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/#article","isPartOf":{"@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/"},"author":{"name":"Roger","@id":"https:\/\/www.theamateurfinancier.com\/blog\/#\/schema\/person\/08574c7c42732c7cc4346dc3fec0e881"},"headline":"Tax Deductions 101: What They Mean for You","datePublished":"2020-10-08T19:25:06+00:00","dateModified":"2021-06-28T15:56:16+00:00","mainEntityOfPage":{"@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/"},"wordCount":593,"image":{"@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/#primaryimage"},"thumbnailUrl":"https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes.jpg","articleSection":["Taxes"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/","url":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/","name":"Tax Deductions 101: What They Mean for You | The Amateur Financier","isPartOf":{"@id":"https:\/\/www.theamateurfinancier.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/#primaryimage"},"image":{"@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/#primaryimage"},"thumbnailUrl":"https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes.jpg","datePublished":"2020-10-08T19:25:06+00:00","dateModified":"2021-06-28T15:56:16+00:00","author":{"@id":"https:\/\/www.theamateurfinancier.com\/blog\/#\/schema\/person\/08574c7c42732c7cc4346dc3fec0e881"},"description":"Tax deductions are common talk around tax season, but what does tax deductible mean for you, really? Here's what you need to know!","breadcrumb":{"@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/#primaryimage","url":"https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes.jpg","contentUrl":"https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes.jpg","width":2000,"height":1414,"caption":"tax form with callculator and glasses"},{"@type":"BreadcrumbList","@id":"https:\/\/www.theamateurfinancier.com\/blog\/tax-deductions-101-what-they-mean-for-you\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.theamateurfinancier.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Tax Deductions 101: What They Mean for You"}]},{"@type":"WebSite","@id":"https:\/\/www.theamateurfinancier.com\/blog\/#website","url":"https:\/\/www.theamateurfinancier.com\/blog\/","name":"The Amateur Financier","description":"Thoughts on Money, Investing and Life","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.theamateurfinancier.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.theamateurfinancier.com\/blog\/#\/schema\/person\/08574c7c42732c7cc4346dc3fec0e881","name":"Roger","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/c306e77aa0a82a330bf778f6c4f8fe4742257b9c7d461be78b15a422b0bab592?s=96&d=blank&r=pg","url":"https:\/\/secure.gravatar.com\/avatar\/c306e77aa0a82a330bf778f6c4f8fe4742257b9c7d461be78b15a422b0bab592?s=96&d=blank&r=pg","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/c306e77aa0a82a330bf778f6c4f8fe4742257b9c7d461be78b15a422b0bab592?s=96&d=blank&r=pg","caption":"Roger"},"sameAs":["https:\/\/www.theamateurfinancier.com\/blog\/","https:\/\/x.com\/https:\/\/twitter.com\/amateurfinance"]}]}},"uagb_featured_image_src":{"full":["https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes.jpg",2000,1414,false],"thumbnail":["https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes-150x150.jpg",150,150,true],"medium":["https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes-300x212.jpg",300,212,true],"medium_large":["https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes-768x543.jpg",768,543,true],"large":["https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes-1024x724.jpg",1024,724,true],"1536x1536":["https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes-1536x1086.jpg",1536,1086,true],"2048x2048":["https:\/\/www.theamateurfinancier.com\/wp-content\/uploads\/2020\/10\/taxes.jpg",2000,1414,false]},"uagb_author_info":{"display_name":"Roger","author_link":"https:\/\/www.theamateurfinancier.com\/blog\/author\/admin\/"},"uagb_comment_info":0,"uagb_excerpt":"About 90% of Americans don\u2019t understand the tax code. You could be paying more in taxes than you should simply because you don\u2019t know how taxes work. The way to limit your tax burden is through tax deductions and tax credits. You are likely to have tax deductible expenses if you have a home or&hellip;","_links":{"self":[{"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/posts\/31941","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/comments?post=31941"}],"version-history":[{"count":2,"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/posts\/31941\/revisions"}],"predecessor-version":[{"id":32741,"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/posts\/31941\/revisions\/32741"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/media\/31943"}],"wp:attachment":[{"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/media?parent=31941"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/categories?post=31941"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.theamateurfinancier.com\/blog\/wp-json\/wp\/v2\/tags?post=31941"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}