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There are many reasons why people should know the tax deduction limits when they claim IRS deductions. Most people would say that the main reason is obviously so that they will have to pay the least amount of taxes to the IRS. Usually, the more tax deductions they are able to claim, the less taxes they will have to pay and most people want to pay as little taxes as possible.

Before a taxpayer can understand the importance of knowing tax deduction limits, they have to understand what tax deductions are. Some people do not even know what they are because they never have to claim them. The concept of tax deductions is simple. Tax deductions are expenses that the IRS allows taxpayers to subtract from their income. The result is that, the more tax deductions the taxpayer can subtract from his or her income, the less taxes he or she will have to pay the IRS.

If a taxpayer wants to pay as little taxes as possible, it is important to know all about tax deductions and that includes tax deduction limits. Some people are eligible to claim more tax deductions than others so it is important to know what you can claim legally to avoid any problems that might occur in the future. One way to learn about tax deductions is to read IRS publications.

Tax deductions and tax credits are not the same thing. Tax deduction limits are also different from tax credit limits. A taxpayer with both tax deductions and tax credits will find himself or herself paying little taxes whereas a taxpayer with neither will have to pay more taxes. While a tax deduction lowers gross income, a tax credit can give the taxpayer dollars directly to the bottom line which is why a tax credit is more popular than a tax deduction.

Choosing the right type of IRS deductions can affect how much taxes a taxpayer owes the IRS. The tax deduction limits do not matter so much if the taxpayer chooses to claim the standard deduction. However, not everyone can claim the standard deduction. If they can, though, it is the easier option of the two and all you have to do is check the box on your tax return form that says 'standard deduction'.

When a taxpayer is not eligible to claim the standard deduction, he or she will have to claim the itemized deductions and pay particular attention to relevant tax deduction limits. The taxpayer, of course, has the option of not claiming anything at all but most of them do to lower their tax bills. Each tax deductible expense will have a limit of how much a taxpayer can claim in tax deduction.

The bottom line is that by knowing the tax deduction limits, taxpayers can make an informed decision about whether to claim the standard deduction or to itemize his or her tax deductions if he or she is eligible to claim both. There are many books, IRS publications and websites that will give details of what the tax deduction limits are for different tax deductions.