People often say that an expense is “a tax write-off”; most everyone interprets this to mean that the expense will have a tax benefit. Generally, such a benefit takes the form of either a deduction or a credit; these benefits’ effects are quite different, however, and each type has various categories. As a result, the tax implications may not be as expected.
In general, a deduction reduces taxable income, whereas a credit reduces the tax itself. Here is a quick guide to help you tell the difference.
If you have questions related to how you might benefit from tax credits or deductions, please call The Garabedian Group, Inc.