Dealing with IRS problems is a stressful and scary ordeal if you fear that you may have done something wrong, either on purpose or completely by accident. The first thing to understand is that the IRS is generally willing to work with individuals who are willing to work with them. You can learn about some things that can get you in trouble here, as well as the best ways to try to work through those issues.
When it comes to income taxes, there are a lot of terms that are heard a lot but are rarely well understood. The idea of "deducting it" is one of those oft-heard but misunderstood terms. So, what is a deduction, and how do you use them to lower your taxes?
What is a Deduction?
A deduction is simply an amount of money that you use to reduce your taxable income. For example, if you earn $50,000 and are able to deduct $10,000, your taxes are calculated on the lower amount of $40,000, thus making your tax bill lower.