Do you know what tax relief is? It might sound like a technical term, but it’s actually rather general. It’s any incentive or program which reduces how much tax person or business might owe. There are numerous examples and instance of tax relief. The allowable deductions for your pension contributions is certainly one such instance. There are also sometimes temporary incentives like tax credits rewarded or applied for buying energy-efficient heating and/or cooling equipment and technology.
Tax relief is done by the government with the intention of reducing tax liability for various parties, be it certain individuals and households, or corporate members of a particular economic sector. Tax relief is often political in nature, done with the purpose of promoting a particular cause or possibly providing aid towards a certain event. For instance, many hurricane victims are often allotted various forms of tax relief if their area is hard hit by a storm or simply declared a disaster area.
Tax relief is alternatively used at intervals for the support of environmental causes, such as the aforementioned tax credits for those who might be convinced to by energy-efficient appliances. The installation of energy-efficient windows also qualifies in many cases, as do things like electric and/or hybrid vehicles or solar panels for energy production at home or a business.
Tax relief can also take the forms of tax deductions, tax credits, the reduction of tax rates, and even the forgiveness of tax liens.
Consider this example: Jane and her husband grow their family by having a baby in 2017. When Jane files her tax return for that year, she might qualify for a child tax credit of $2,000, lowering her tax bill by that amount. In short, Jane and her husband saw tax relief from having their child.
Tax relief is available in hundreds to even thousands of forms in any given tax year. The terminology also sees frequent use in political campaigns or conversations when referencing the possibility of reducing the comprehensive tax burden that taxpayers face. Many individuals, families, households, organizations, and businesses can find tax relief, but many forms of it are very limited in scope or only available through select situations and circumstances. Taxpayers of particular income levels might not be able to enjoy certain tax breaks, however.
Tax relief is important because it can lower the tax bills that payers face, which explains why both taxpayers and tax advisors, such as those at Vitale and Associates, spend a lot of time figuring out which credits and calculations apply in any given year. The matter is also an influential one in political elections. Governments of all levels, federal, state, and local, like to implement various tax relief programs to either discourage or encourage particular behaviors in various programs or industries.
Knowing what forms of tax relief are available to you or your business can help you reduce your total tax liability, resulting in a smaller bill due to the government. Given that tax breaks or credits can happen not only with the federal government and IRS, but also your state, county, and municipal governments, it’s good to have a tax professional familiar with all the relief options who can keep you abreast of all your options.
Taking advantage of tax relief doesn’t just happen when you fill out your annual taxes. You don’t want to miss anything, but it can also be too late if that year is over. Knowing the current and upcoming ones can influence your spending and record keeping so your tax professional has an easier time helping you keep more of your money.