Most people look for every possible way to lower their tax bill. A write-off helps you do this -- it’s a deduction you’re permitted to take from your income for something you spent money on during the tax year, leaving less money you must pay taxes on. The issue becomes confusing, however, because different types of deductions exist and each comes with its own set of rules.
The Internal Revenue Service limits what expenses you can deduct from your income, and you can only write them off if you itemize your deductions. You have the option of taking the standard deduction instead, which would make sense if you don’t have a lot of qualifying itemized expenses. For tax year 2014, for example, the standard deduction is $6,200 if you’re single, $9,100 if you qualify as head of household and $12,400 for married couples filing jointly. Itemized expenses that you can write off include home mortgage interest in some cases, medical expenses, charitable contributions and work-related expenses.
You can write off some expenses without itemizing, such as alimony you might have paid, tuition and moving expenses. These deductions are listed on the first page of Form 1040, “above the line.” They help determine your adjusted gross income.
Write-Offs vs. Tax Credits
A tax credit, such as the Child and Dependent Care credit, is different from a write-off. It’s an amount of money that comes directly off the amount of taxes you owe, not the amount of income you must pay taxes on.