Deductions and Exemptions

Deductions and exemptions are tax concepts that help reduce the amount of income that is subject to taxation. Deductions are specific expenses that taxpayers can subtract from their total income, lowering their taxable income. Common deductions include mortgage interest, medical expenses, and charitable contributions. Exemptions, on the other hand, allow taxpayers to deduct a certain amount for themselves and their dependents from their taxable income. While exemptions reduce taxable income, deductions can vary based on expenses, making them impactful in determining the total tax liability. Understanding these concepts can help taxpayers minimize their tax obligations legally.