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Year-round tax planning: All taxpayers should understand eligibility for credits and deductions

Posted by Admin Posted on June 30 2022

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Tax credits and deductions can help lower the amount of tax owed. All taxpayers should begin planning now to take advantage of the credits and deductions they are eligible for when they file their 2022 federal income tax return next year.

Here are a few facts that can help taxpayers with their year-round tax planning:

  • Adjusted Gross Income, or AGI, is a taxpayer's total gross income minus specific deductions that can reduce the taxpayer's income before calculating tax owed. AGI is the starting point for calculating taxes and determining a taxpayer's eligibility for certain tax credits and deductions that can help lower their tax bill.
  • Taxable income is a taxpayer's AGI minus the standard deduction or itemized deductions, whichever is greater.
  • The standard deduction is a set dollar amount that reduces taxable income. Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions and using the option that lowers their tax the most.
  • Properly claiming tax credits can reduce taxes owed or boost refunds.
  • Some tax credits, like the earned income tax credit, are refundable, which means an eligible taxpayer can get money refunded to them even if they don't owe any taxes.
  • To claim a deduction or credit, taxpayers should keep records that show their eligibility for it.

If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.

Source: IRS

The information provided on the LBCPA Blog is a community service for general information purposes only, and should not be used as a substitute for consultation with professional advisors who specialize in the topics covered. Please refer to your advisors for specific advice on these subjects. The information is not intended to be used, and it cannot be used, for the purposes of avoiding U.S. Federal and/or State tax laws or the tax laws of any foreign jurisdiction.

These blogs contain general information only and Lord Breakspeare Callaghan LLC or any of the other companies or firms presenting information are not providing accounting, business, financial, investment, legal, tax, or other professional advice or services. Lord Breakspeare Callaghan LLC or any of the other companies or firms contributing with articles shall not be responsible for any loss sustained by any person who relies on this information.