Helpful Information

by | Jul 31, 2018

Tax Credit Vs. Tax Deduction Deduction or Credit

Have you ever wondered what’s better, a tax credit or a tax deduction?

Subtract tax credits from the amount of tax you owe. There are two types of tax credits: A nonrefundable tax credit means you get a refund only up to the amount you owe. A refundable tax credit means you get a refund, even if it’s more than what you owe. Subtract tax deductions from your income before you figure the amount of tax you owe.
When the tax credit and the tax deduction are the same amount the tax credit is always better.
A tax credit directly reduces the person’s taxes, where a tax deduction reduces the person’s taxable income.

Tax Credit vs Deduction

Tax-Free Rental Property-Virtually Everyone Can Rent Tax Free!
Did you know you can rent out your property short term and tax free?
In addition to your tax free income you can still deduct your mortgage interest expense and property taxes as itemized deductions.

Reasons Why to Rent out Property:

Special Events
Vacation Rentals
Alternative to Hotels

Tax-Free Rental Property

Marginal Tax Rates

Your tax bracket and the percentage of your income you actually pay are two different things. Do you know what your marginal tax rate is? Learn what it is and how to use it to your advantage.

Have questions about your tax rate or how to lower your tax liability? Questions about your tax situation?  Please contact us for answers at 760-423-0133 or info@solowitzyehcpa.com

Tax Terms: Marginal Tax Rate

Tax Terms: Understanding Effective Tax Rate

Understanding Effective Tax Rate:

Before you prepare your tax return it is a good idea to calculate your personal federal income tax rate based on your income and filing status.  Knowing your effective tax rate is the starting point to lowering your tax amount.  Effective tax rate is the percentage of your income that you pay in taxes.

Tax Terms: Effective Tax Rate