Tax Deductions & Credits: What You Don’t Know Could Cost You

In this episode of How to Lower Your Tax Bill, host Terrence Hutchins is joined by T’mia Kelly to break down the difference between tax deductions and credits—and how understanding them can save you thousands. They dive into carry-forward tax benefits, the importance of reviewing last year’s tax return, and how historical tax changes (like the introduction of the standard deduction in 1944) continue to impact taxpayers today.

Key Topics Covered

The difference between tax credits (dollar-for-dollar reductions) vs. tax deductions (which lower taxable income).
Common carry-forward deductions that can lower your tax bill in future years, including:
- Net Operating Losses (NOLs) for business owners.
- Capital losses from stocks and investments.
- Passive activity losses from rental properties.
- Charitable contribution carry-forwards for those who donate large sums.
Business tax credits like the Work Opportunity Tax Credit (WOTC) and R&D credit—and how to leverage them.
How solar panels and energy-efficient home upgrades qualify for tax credits (but don’t believe every salesperson’s pitch).
The importance of reviewing last year’s tax return to avoid missing out on deductions and credits you’re entitled to.

Featured Tax Fact

Did you know that before 1944, tax brackets were so complex that President Franklin D. Roosevelt would submit his tax return half-completed with a $15,000 check, telling the IRS to "send him an invoice" for the balance? The complexity of tax deductions at the time led to the creation of the standard deduction to simplify the process for Americans.

For more expert tax strategies, subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts. And as always: Keep More of What You Earn!

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