deduction (redirected from deductions)

Deduction

Any item or expenditure subtracted from gross income to reduce the amount of income subject to tax.

Also referred to as "allowable deduction."

Notes:

For example, if you make $40,000 and you have a deduction for $1,000, then your taxable income is reduced to $39,000.

See also: Income Tax, Write Off

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Deduction

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

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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.