A tax write-off, also known as a tax deduction, is an expense that can be subtracted from your taxable income. By reducing your taxable income, a tax write-off can lower your tax bill.
The purpose of tax write-offs is to incentivize certain types of spending or investment by allowing taxpayers to lower their tax liability. For example, if you make a charitable donation, you can write off the amount of the donation on your tax return.
There are many different types of expenses that can be written off, including:
Charitable donations
Medical expenses
State and local taxes
Mortgage interest
Business expenses
Education expenses
Moving expenses for a job
It’s important to note that there are limits to the amount of a write-off you can claim, and not all expenses are deductible. Additionally, certain types of write-offs may only be available if you itemize your deductions on your tax return.
To take advantage of tax write-offs, it’s important to keep detailed records of your expenses and to consult with a tax professional or use tax preparation software to ensure that you are claiming all of the write-offs that you are eligible for.
