Personal deduction planning 

Paying taxes is part of the responsibility of living in the United States. But most people understandably don’t want to pay more than they have to. An important part of minimizing your federal income tax liability is to understand the rules and make the most of your tax planning opportunities. Personal deduction planning is one aspect of tax planning. You should aim to use your deductions in the most efficient manner and take all deductions to which you’re entitled. Deductions lower your taxable income Your first step is to understand how deductions work. You subtract certain deductions from your total income to arrive at your adjusted gross income (AGI); these deductions are commonly referred to as adjustments to income or as “above-the-line” deductions. Then, you subtract other deductions and exemptions from your AGI to determine your taxable income; these deductions are sometimes referred to as “below-the- line” deductions. Your tax liability is calculated based on your taxable income. Generally speaking, therefore, the higher your deduction level, the lower your tax liability. You can either take a standard deduction or itemize After you’ve computed your AGI, you’ll generally want to subtract the greater of either the standard deduction or the total