Tax Deduction

A Tax Deduction reduces taxable income, thereby lowering the overall tax liability.

Types of Deductions:

• Standard Deduction: A fixed amount that taxpayers can deduct from their income, varying by filing status.

• Itemized Deductions: Specific expenses that can be deducted, such as mortgage interest, charitable contributions, and medical expenses.

Choosing Between Standard and Itemized Deductions:

Taxpayers should compare the standard deduction to the total of their itemized deductions and choose the higher amount to minimize tax liability.