The Internal Revenue Service collects only on your taxable income. So an easy way to cut your tax bill is to reduce your taxable income.
You do that by claiming deductions when you file. But the exact way you take these deductions depends on your personal circumstances.
There are two common deduction methods: standard or itemized.
Most taxpayers take the standard deduction, which can be claimed on any of the three individual tax returns. These filers find that the standard deduction exceeds the amount they could achieve by itemizing. Even better, it also means they don't have to keep track of each possible tax-deductible expense throughout the year.
In addition to deductions, each filer gets to claim exemptions to help reduce taxable income. Exemptions are the tax-form version of the allowances you enumerated on your W-4. This exemption amount -- for you, your spouse and any dependents -- is available to every filer, regardless of which deduction method is used.
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