IRSTAX | TAX DEDUCTIONS

A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income.

The United States income tax system is progressive; as taxable income rises, a higher percentage is charged on a tiered system. E.g., in 2006 for Single taxpayers, the first $7,550 of taxable income is charged 10 percent.

However, if a person has more than $7,550 in taxable income, then he or she must pay a flat $755 (10 percent of the first $7,550), plus 15% of the amount over 7,550.

Be on guard for tax scams. If the tax deductions promised sound too good to be true, they probably are. Scam artists make money by making you believe that you don't have to pay taxes. If you don't pay the correct amount of taxes owed, you will be the one responsible for paying any sort of penalty incurred.

Most individual taxpayers can pay the taxes they owe electronically if they file using the telephone or using a computer. Electronic payment options give taxpayers an alternative to paying taxes by check or money order. Payments can be made 24 hours a day, 7 days a week.

Electronic TAX Payment Options for Individuals

You can choose one of two electronic payment options, Electronic Funds Withdrawal or credit card. Either option is a convenient, safe and secure method for paying individual income taxes. You can also use the Electronic Federal Tax Payment System if you enroll in advance. To receive an enrollment form or more information, called EFTPS Customer Service at (800) 555-4477 or (800) 945-8400 or visit the EFTPS website to enroll online.

In the United States there are many different types of tax deductions. One may choose between a standard deduction or itemized deductions.

Some tax deductions are aimed at individuals; many are directed to businesses. The complicated maze of tax deductions that Congress has instituted over the past 70 years has contributed to the view that the tax code in the United States needs to be completely redone in a simpler fashion.

Opponents of the current tax code favor reducing or eliminating many existing tax deductions, particularly for corporations that have come to rely on the code as a welfare crutch. Reformers contend that the government should encourage spending on things like charities, home ownership, and education through means other than tax deductions.