I hear on TV people talking about deductibles when filing taxes. What does that mean? I think on the Simpsons they said having Maggie is a deductible. Deducting what from what? I’m not American, so I don’t follow that system.
Follow-up: I think I understand it a lot more now. The government will set out criteria which will entitle you to pay less tax. It’s your job to notify the tax man at the start/end? of the tax year, so that you pay what’s deemed correct.
In: 8
In the American system, once you have added up all of your sources of income for the year (ex. salary, sale of stocks, etc) you are allowed to take “deductions” for certain things (ex. a dependent like a child, interest on certain loans, etc.) in order to lower the total amount of income you have to consider for taxable purposes. The more you can lower your taxable income (total income minus deductions) the less you will owe the government.
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