The tax world can be more than a little confusing, but empowering yourself with the basic lingo of how it all works goes a long way to feeling confident as a biz owner.

One of the biggies I often explained to clients when I was a tax preparer that may be helpful for you is understanding the difference between credits & write-offs…

But first, let’s set the context for this understanding…

Revenue (minus) Expenses (equals) Profit.
Profit (also known as net income) is the amount you are taxed on.
Based on your tax bracket, you owe a portion of your Profit in taxes.

Ok, now that we got that out of the way, let’s look at the difference between write-offs & credits…

🧮 A Write-off is an Expense that gets subtracted from your Revenue to figure your Profit. In other words, it reduces the amount you will be taxed on.

💵 A Credit is an amount that gets subtracted from the actually tax amount you owe. In other words, it makes a much bigger dent in the amount you owe.

Your tax preparer knows about fancy credits you may be eligible for, so leave those to them.

But YOU know what you spent money on during the year that may be used as a write-off.

All you need is the list of eligible expenses so you don’t miss a thing.

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