more tax stuff you need to know 🤮

School didn’t teach yall this stuff, so why not take 1 minute to read about it 👇

DEFINITION
Tax deductions and tax credits (explained ot a 5th grader)

Let's talk about tax credits and tax deductions.

Imagine you're at a store, and you have a coupon for $5 off your purchase. That coupon is like a tax deduction. It takes a certain amount of money off what you owe. So, if you had to pay $20 for something and you use the $5 coupon, you only have to pay $15.

Now, think about a tax credit like getting a $5 gift card instead of a coupon. With a gift card, you get $5 to spend, no matter what you bought. So, if you had to pay $20 for something and you have a $5 gift card, you still pay $20, but you can use the gift card to pay part of it.

So, with tax deductions, you pay less in taxes because you're subtracting some of your expenses. With tax credits, you pay less in taxes because you're getting a little gift from the government to help cover what you owe.

PRACTICAL ADVICE
Tax credits are better

With a tax deduction, you're just paying less because of your expenses. But with a tax credit, you're getting money back from the government as a reward for doing something they want to encourage, like buying energy-efficient appliances or going to college.

OUR COMMUNITY
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