Tax Credits vs. Write-offs: Know the Difference

Tax deductions and credits are a common topic of conversation.

Are you aware of the difference?

Which one is worth more?

Many people have the wrong ideas about taxes.

One of the biggest is the misconception that a tax credit and a write-off are the same.

They aren’t. In actuality, they differ significantly.

Here is a brief comparison of how the two differ:

An expense that is deducted from your taxable income is a tax write-off. Accordingly, your taxable income would be $45,000 if you had a $50,000 taxable income and $5,000 in write-offs.

The tax credit results in a dollar-for-dollar reduction in your tax liability. As a result, your tax obligation would be $4,000 if you owe $5,000 in taxes and receive a $1,000 tax credit.

The main fact is that while a tax credit lowers your actual tax liability, a tax write-off lowers your taxable income. And it might significantly alter how you file your taxes.

Let’s Talk!

->Schedule Your Free Tax Assessment Here<-