Deductions and credits can reduce taxable income from "summary" of Income Tax Fundamentals 2021 by Gerald E. Whittenburg,Martha Altus-Buller,Steven Gill
When preparing your tax return, it is important to understand the impact of deductions and credits on your taxable income. Deductions and credits can significantly reduce the amount of income that is subject to taxation, ultimately lowering your overall tax liability. Deductions are expenses that you can subtract from your total income, resulting in a lower taxable income. Common deductions include expenses for education, healthcare, home mortgage interest, and charitable contributions. By deducting these expenses from your income, you are able to reduce the amount of income that is subject to taxation, ultimately lowering your tax bill. Credits, on the other hand, are even more valuable than deductions because they directly reduce the amount of tax yo...
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