CWT Certificates: Tax Savings in Disguise

Top of Mind

- ELLAINE JANE MILCA

Just as blood circulates through the body to nourish and support vital organs, taxes flow into government coffers to fund essential public services such as health care, education and infrastructure. Without taxes—much like the absence of blood—a government cannot function and serve its people. While taxes are critical to a thriving society, it is natural for taxpayers to seek ways to minimize their tax burden and pay only what is necessary.

As the tax filing season approaches, many business owners may feel pressure from their tax liabilities. To reduce this liability, it is important to understand the exemptions and deductions available to one's business.

However, many business owners focus primarily on deductions and overlook another powerful tool: tax credits.

Tax credits can significantly lower a taxpayer's tax liability but are often underutilized. Unlike deductions, which reduce taxable income, tax credits directly reduce the amount of tax owed. After determining taxable income and applying any relevant deductions, tax liability is calculated as a percentage of the income after deductions. From that amount, any applicable tax credits are subtracted from the calculated liability, and the result is the final tax due.