Get Paid $13,400 For A Baby

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SEINFELD, Jerry Seinfeld, Jason Alexander, Michael Richards, 1990-98, (c)Castle Rock Entertainment/courtesy Everett Collection

Like Kramer & Jerry, a lot of folks don’t really know what a write-off is.  It’s a tax deduction, but a lot of folks think it is a tax credit.  The difference is HUGE.  A tax credit lowers the amount you owe in taxes, dollar for dollar.  That’s pretty sweet.  A tax deduction is basically a discount equal to your tax bracket.

If you are in the 25% tax bracket, and you spend $1,000 on something that you can write-off your income taxes as a tax deduction, you will save $250 in taxes.  But a $1,000 tax credit chops $1,000 off what you owe in taxes, no matter which bracket.

So where do I gets me some of them tax credits?

–   Adopt at $13,400 a pop!
–   Buy a Chevy Volt and get $7,500.
–   If you’ve been fixin’ to get a propeller on a stick, go solar or geothermal, get 30% of the cost.

Maybe that’s why Brangelina adopted so many babies.  It was a profit deal!  The tax credit for adoption starts to phase out when your modified adjusted gross income is $201,010, and it is completely gone at $241,010.  I wonder if Brad & Angelina had mediocre years (for them) and swooped in for some tax babies!

More on Write-Offs

If you look to buy a house, people always chime in, “You know, you can write-off  the interest on a mortgage.”  That is better than nothing.  But if you are in the 25% tax bracket and you buy a house because you want to get 25 cents back for every dollar you pay in interest, I have an offer for you.  I you liked getting 25 cents for every dollar you paid someone, will give you 50 cents for every dollar you give me!  Deal?

Bottom line: If you need something, and you can get a tax deduction or tax credit – great!  But if you don’t need it, keep the money in your pocket.

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