Tax Planning For New Business

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You have a choice here: You can either claim the standard deduction for your filing status, or you can itemize your qualifying deductions. One key tax planning strategy is to keep track of your itemized expenses throughout the year using a spreadsheet or personal finance program.

You can then quickly compare your itemized expenses with your standard deduction.

That's an additional $800 off his taxable income, the difference between $13,000 and $12,200.

But a taxpayer who has only $9,000 in itemized deductions would end up paying taxes on $3,200 more in income if she itemizes rather than claims the standard deduction for her single filing status.

Tax credits don't just reduce your taxable income—they're better than that.

They subtract directly from any tax debt you end up owing the IRS after you take all the adjustments to income and tax deductions you're entitled to.

The flip side is that your AGI will shrink if you have adjustments but no additional sources of income.

These deductions appear on lines 23 through 35 of Schedule 1, a form that didn't exist in tax years 2017 or earlier.

You should always take the higher of your standard deduction or your itemized deduction to avoid paying taxes on more income than you have to.

A single taxpayer who has ,000 in itemized deductions would do better to itemize than to claim the standard deduction.


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