Barbara Schreihans • Oct 06, 2023

Knowledge is money!! Or is the saying knowledge is power?

 Either way—the more knowledge you have about taxes—the more money you are going to save on your tax bill.

 So let's take it back to some 101 tax knowledge and break down the difference between tax deductions and tax credits. And why understanding the difference can save you some serious cash.

 I know you've heard me talk about tax deductions a time or two…I mean I have an entire course teaching you about hundreds of tax deductions you can take!

Tax deductions are expenses that you can deduct from your taxable income, which can reduce the amount of taxes you owe. Some common deductions include business travel, office supplies and equipment, business-related courses and trainings, and employee's salaries and benefits.

For example, let's say you're a business coach and you earned $50,000 last year. You deduct expenses such as your laptop, internet, business travel, and office space, which total up to $20,000. 

 Your taxable income would then be reduced to $30,000, and you would pay less in taxes.

Pretty cool, right?

Let's switch gears slightly and talk about tax credits. 

Unlike tax deductions, tax credits directly reduce the amount of tax you owe. So, if you owe $5,000 in taxes and have a tax credit worth $1,000, you would only owe $4,000 in taxes. 

There are all kinds of tax credits out there, such as:

• Research and Development Tax Credit
  

• Child Tax Credit
  

• Employee Retention Credit

Of course each credit has its own rules and qualifications but that's why we are here to help make sure you've taken advantage of every credit you're eligible for.

Know this:

When you take advantage of both deductions and credits…that's when you're able to significantly reduce your tax bill and keep more of your hard-earned money in your pocket. 

Remember, taxes don't have to be boring—with just a little bit of education you can save thousands of dollars every year…and I don't know about you but that doesn't sound boring to me!

Looking for other ways to lower your tax bill so you can completely write off your life?

Click Here For The Write Off Your Life Course