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Getting ready for tax season
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Tax deductions are subtracted from what?


Deductions are always subtracted from your taxable income.

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The Federal Insurance Contribution Act (FICA) is deducted from your check to pay for what?


FICA is only used to help pay for Social Security and Medicare.

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Key Takeaways

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Remember, one of the best ways to be ready for tax season is to learn the basics of how you’re taxed. Here are some things to keep in mind.

  • Consider deductions—they can help reduce your tax obligation by reducing your taxable income
  • Estimate your itemized and standard deductions, and use the larger of the two
  • Consider your real estate. If your mortgage is under $1 million, the interest you pay may be tax deductible. Additionally, the interest on most home equity lines of credit and home equity loans (up to a certain amount) is deductible
  • Get to know your Form W-2. It’s what both your employer and the IRS use to match up what you owe in taxes based on your taxable income and what’s been withheld from your paycheck
  • When two people get married they may pay taxes based on their combined income rather than their individual incomes. Often this change may increase their taxes which some call the marriage penalty. However, there are cases where the change may lower their overall taxes
  • Work with a tax professional to determine what effect the alternative minimum tax (AMT) could have on how much you’re paying in taxes. The AMT requires a separate tax calculation under which you may be required to pay an additional amount of tax