What are tax deductions used for?

The government encourages people to give money to charitable organizations. If you give money to a charitable organization, you may subtract that amount from your overall income before you calculate your taxes due. Thus, if you made $50,000 and gave away 10% or $5,000, your income tax is based on an income of 45,000. You will owe less tax.

Due to the nature of our income tax, if your income is slightly over 250,000 and you can give away enough money to charity to get it below 250,000 you will be far better off for tax purposes. There may be a few more such anomalies. (If you make that kind of money, you have no business asking me for advice. You can afford a CPA.)