Deductions Credits and Filing

After calculating your adjusted gross income (AGI), every taxpayer gets to subtract either the standard deduction or their total itemized deductions from that number — whichever is larger. The standard deduction is a flat dollar amount set by Congress and adjusted each year for inflation. For…

Tax credits and deductions both reduce your tax bill, but they work in fundamentally different ways. A deduction reduces your taxable income, and its benefit depends entirely on your marginal tax rate. A $1,000 deduction saves $220 for someone in the 22% bracket but only $120 for someone in the…

In 1969, Treasury Secretary Joseph Barr testified before Congress that 155 millionaires had paid zero federal income tax that year. They had done nothing illegal — they had simply stacked itemized deductions, claimed accelerated depreciation on investments, earned interest from tax-exempt bonds…

Filing status is one of the first things you determine when preparing a federal tax return, and it affects nearly every calculation that follows. Your status determines your tax bracket thresholds, the size of your standard deduction, and your eligibility for many credits and deductions. Choosing…