what “tax deductible” actually means, practically speaking

Question

I just don’t get it.

In: 3

Answer 1

It means that you can subtract it from your income. Depending on what you do for a living or what investments you make there are ways you can deduct things from your income. A simple example is an Uber driver. They are allowed to deduct car expenses from their income. So let’s say you make 45,000 a year. Now let’s say you spent 5,000 on gas and oil changes. If you kept your receipts you can put this in your taxes and only have to report an income of 40,000. Thus reducing the amount of taxes you are paying.