Video: What are Tax Benefits?
Tax benefits are things that save you money on taxes, like deductions or credits. Educate yourself about tax benefits with help from TurboTax in this video clip.
Video transcript:
Hello, I'm Jeremy from TurboTax with some information on various tax benefits.
You may often hear the term tax benefit and wonder what exactly this applies to. Well, not to worry, a tax benefit is just a term that refers to anything that saves you money in taxes, whether it is a federal income tax deduction or a reduction in your local property tax.
For the most part, a tax benefit usually refers to an income tax deduction, credit, exemption or exclusion since each type offers potential tax savings. What the term does not explain is the different ways that each one saves you money on taxes. For example, a deduction only reduces the amount of your income that is subject to income tax rates, whereas a credit will reduce the amount of tax you owe dollar for dollar, yet they are both considered tax benefits.
An exclusion is also considered a tax benefit even though the savings are not always calculated on your tax return. Though it is possible to calculate your tax savings by including the amount in your taxable income, essentially exclusions refer to certain types of income that government specifically allows you to exclude from taxable income. Sometimes, as is the case with the foreign earned income exclusion, you must include the income and then take it off later on the return.
For more tax tips and guidance, visit TurboTax.com.
With TurboTax Live Full Service, a local expert matched to your unique situation will do your taxes for you start to finish. Or, get unlimited help and advice from tax experts while you do your taxes with TurboTax Live Assisted.
And if you want to file your own taxes, TurboTax will guide you step by step so you can feel confident they'll be done right. No matter which way you file, we guarantee 100% accuracy and your maximum refund.