Deduction


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Related to Deduction: tax deduction

Deduction

An expense that is allowable as a reduction of gross taxable income by the IRS e.g., charity donations.

Deduction

An amount of money that one may subtract from one's gross annual income when calculating one's income tax liability. A common misconception about tax deductions is that they represent a dollar-for-dollar reduction of one's tax liability. Rather, a deduction removes a certain dollar amount from the income the IRS uses to calculate the percentage of one's income that is owed in taxes. Common deductions are charitable contributions, business expenses, and interest on mortgages. See also: Tax credit.

deduction

An expenditure that may legally be used to reduce an individual's income-tax liability. Potential deductions of particular interest to investors are expenditures for subscriptions to financial publications, a lock box for storing securities, and computer software for investment-related activities. These deductions, combined with employee business expenses and miscellaneous deductions, may be subtracted from a person's taxable income only to the extent their total exceeds 2% of that person's adjusted gross income. Interest paid on loans used to finance investments is deductible only against investment income. Also called itemized deduction, tax deduction. See also charitable contribution deduction.

Deduction.

A deduction is an amount you can subtract from your gross income or adjusted gross income to lower your taxable income when you file your income tax return.

Certain deductions, such as money contributed to a traditional IRA or interest payments on a college loan, are available only to taxpayers who qualify for these deductions based on specific expenditures or income limits, or both.

Other deductions are more widely available. For example, you can take a standard deduction, an amount that's fixed each year. And if your expenses for certain things, such as home mortgage interest, real estate taxes, and state and local income taxes, total more than the standard deduction, it may pay for you to itemize deductions instead.

However, if your adjusted gross income is above the limit Congress sets for the year, you may lose some of or all these deductions.

Deduction

An amount that may be subtracted from income that is otherwise taxable.
References in periodicals archive ?
The legal fees litigants pay for claims that fall fully under this exclusion are not at issue, since the exclusion of any income renders the legal fee deduction question irrelevant.
The Joint Committee on Taxation's Technical Explanation states that "It is noted that the President's Advisory Panel on Federal Tax Reform and the staff of the Joint Committee on Taxation both have concluded that the fair market value-based deduction for contributions of clothing and household items present difficult tax administration issues, as determining the correct value of an item is a fact-intensive, and thus also a resource-intensive matter.
Those sites offer federal and state guidelines for the deduction.
Subject to the W-2 wage limitation, taxpayers are entitled to a production deduction equal to three percent of the lesser of QPAI or taxable income in 2005 and 2006.
A limit on the Section 179 expense deduction is increased to $100,000 for qualified property.
In addition to experiencing fewer increases in deductions, companies who use cross-functional teams are more likely to actively take steps to deal with any increase in deduction volume.
Such an information campaign also would cost the Treasury less than the proposed tax deduction.
The finance minister wants to limit the deduction to the amount of the housing allowance, where that's part of the remuneration package, and force employers to come up with an amount earmarked for housing where remuneration is a straight salary.
The first 37 pages of the book consist of an introduction to deductions, written succinctly and clearly for the layperson.
The impact of the homeowner deduction in promoting home ownership is debatable.
More Taxpayers Could Take This Deduction If They Had Proper Backup.