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 us system you have your gross income of whatever you make per year
You can then use deductibles to basically remove a portion of your income from taxes.
The standard deduction in the us is around $10,000 so if you made $50,000 per year you do taxes as if you made $40,000 that year. This obviously means you pay less in taxes.
You can forgo the standard deduction and deduct a bunch of other stuff spelled out by the IRS. The common example is charitable donations
Unfortunately it’s a bit complex.
However worth mentioning taxes usually come out each paycheck based on your income and a few other things and then you basically compare your end of year “how much taxes did I pay” and “how much taxes was I supposed to pay” and if you did it right you would have paid more than you were supposed to, and get a refund check.
Tldr deductibles or deductions are things Americans can claim to basically delete income from tax assessments. Every American should also claim at least 1 deduction..most claim the standard deduction but some people will itemize a list and claim them instead.
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