Ok so I know I just asked a question just a few moments ago asking if I should Itemize or standardize...and everyone says standardize. In the tax world what does "deduction" mean anyways?? Is that how much I would get back or how much the IRS gets from me?? because my standard is 5150 and my itemized is 28. So if I went with standard, I'd only get 28 bucks back?? Reason why I ask is because the 5150 is more than I've made all year, its way more than my income of 2000.
How I make that little is I work a job thats 5.15 an hour, have no car, no house payements since I live with my mom and am attending college. (Nope can't claim college expenses since its all through finacial aid.)
2007-02-18 00:08:53 · 7 answers · asked by misscountrylover777 2 in Business & Finance ➔ Taxes ➔ United States
Deductions are subtracted from your total income to lower it. what you have left after your deductions is considered to be your taxable income, Your taxable income is what you pay taxes on.
If you have 10,150.00 in income
minus your standard deduction of 5,150.00
less your exemption (if qualified) 3,300.00
Your taxable income would be 1,700.00
So instead of paying tax on 10,150.00 you are only paying tax on
1,700.00
With your income of 2,000.00 your standard deduction would be 2,250.00 ( based on the worksheet on the 1040EZ) you would have no taxable income and would get all of your Federal Tax withheld back as a refund
2007-02-18 00:45:36 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Deductions are amounts that are subtracted from your income before your tax is calculated. Everyone gets a "standard" amount that they can take without any proof, but if your eligible expenses are more than your standard, you "itemize" (list) them and then you can take that amount instead.
The deduction, standard or itemized, does NOT say you're getting that much back. What you get back depends on how much you had withheld, and how much your total tax is. If you made under $5150 and it was all on a W-2, then you shouldn't owe any tax, and your refund will be whatever was withheld (box 2 on your W-2).
2007-02-18 12:31:13 · answer #2 · answered by Judy 7 · 0⤊ 1⤋
Deductions reduce your taxable income. Every single taxpayer gets a standard deduction of $5,150 that reduces your taxable income by that amount. It does NOT mean that you get that much back! If your itemized deductions are only $28.00, it would not make sense to itemize as you would pay MUCH higher taxes if you did.
If you made less than $8,450 in 2006, you have no tax liability at all. You only need to file a return if you had income taxes withheld from your pay and want to have those taxes refunded.
If no income taxes were withheld form your pay (box 2 on your Form W2) there is no need to file a return unless you qualify for the Earned Income Tax Credit. If you're under 25 and have no dependents, you are not eligible for the EITC.
2007-02-18 00:47:34 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 2⤋
An itemized deduction is a deduction from a taxpayers taxable adjusted gross income that is made up of deductions for money spent on certain goods and services throughout the year. Deductions that are allowed are outlined by the IRS and include expenses such as mortgage interest, state and local taxes, gifts, medical expenses, charitable donations, losses taken on financial assets, among others.
The amount you deduct is NOT the amount you will get back. It just lessens the amount of income that will be taxed. Your adjusted gross income is the income left after you take your standard deduction or the itemized deductions. This is the amount that you will pay income tax on.
2007-02-18 01:13:33 · answer #4 · answered by mike9626 3 · 0⤊ 2⤋
It's a conversational gimmick that conveys, "What comes next is just my opinion about a not-so-important topic." So if I'm telling you about my day, I could say "I ate breakfast, washed dishes, checked my emails, then fed the cat." Pretty routine and humdrum, right? Nothing exciting there. Then I could continue, "Anywho, that was my exciting morning. How was yours?" It also implies that you and I are close enough for me to use sub-standard English without fear of you thinking less of me.
2016-03-29 01:08:36 · answer #5 · answered by Anonymous · 0⤊ 0⤋
deductions reduce taxable income
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2007-02-20 18:52:20 · answer #6 · answered by ellen h 2 · 0⤊ 1⤋
When you say it is all through financial aid, are you referring to loans or grants. If it is only loans then you can still get a education credit, or you may want your parents to get the credit.
2007-02-18 02:04:42 · answer #7 · answered by darrenwelsh429 2 · 0⤊ 2⤋