im autistic and have reading disabilities so i dont understand anything google says 🥲
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Let’s ignore tax brackets for a moment. Let’s say you’re paying a flat tax rate of 10% on your income. If you make $80,000 in that year, you’ll pay 10% in taxes, or $8,000. Easy enough.
However, the government recognizes that it isn’t *really* that simple, because life is complicated. They also want to encourage you to donate to charity and whatnot. So they let you “write off” money. Let’s say you donate $1000 to a registered charity, and you can “write that off.” That means you subtract that amount from your income when you calculate your tax owed.
So you made $80,000, but for paying your taxes you can *say* that you made $79,000. That means you only owe $7,900.
You can write off a lot of things. For example, if a business loses a lot of money for some reason, like they invest a lot of money into a new factory but then surprise, Covid happens and they have to shut the factory down. They may be able to “write off” that loss – meaning, they subtract some amount of what they spent when they report their earnings to calculate how much tax they owe.
You can also write off, say, a loss on stock investments sometimes, part of your mortgage when you buy a house, etc.
A “standard deduction” when you file your taxes is saying that either you don’t have enough things to write off, or it’s a bunch of little things and it isn’t worth your time to track them all and add it all up properly. Instead, the government provides a standard amount that anyone and everyone can “write off” just because they don’t want taxes to be too much of a burden.
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