When I claim something as a tax deduction I will get ALL that money back in my tax?
ANSWER
This is something that always comes up a few times per year as we prepare tax returns. You may well be able to claim 100% of an expense as a tax deduction but the actual money benefit to you is only related to your tax bracket. This is because the tax deduction reduces your taxable income, it does not come back to you as a 100% tax offset.
For example, if you are in the 30% tax bracket and you claim $300 for your union fees, then you would receive a $90 (30%) tax benefit. This $90 will either come back to you as extra refund or will reduce your tax bill (if you have one) by $90.
So when it comes to tax deductible expenses, always remember that they are still costing you real money and the tax deduction just reduces the overall cost.
