Tax Deductions

There is two common ways to reduce your taxes.  Tax Credits and Tax Deductions.  We will go into each to show the difference.

Tax Credits:

Normally a a tax credit is more valuable than a tax deduction because it reduced taxes dollar for dollar.

Tax Deductions:

A deduction removes a percentage of tax owed.

One great deduction for 2010 includes being able to write off up to .50 cents per mile you drive, this is only miles that can be related to business expenses so you daily commute to your job does not count unless your job is your own business.  Unfortunately this is about 5 cents less than what was allowable from last year in 2009.

Another way to save some money on taxes is if you lost assets do to theft or damage.  The IRS has decided to relax the requirements and deductables that are needed to meet in order to receive a benefit.  The asset loss only has to exceed $100.00, a nice break knowing that it used to be $500.00.  this should really help those who have lost assets due to terrible circumstances.