tax deduction

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Tax deduction

An expense that a taxpayer is allowed to deduct from taxable income.

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.

tax deduction

See deduction.

tax deduction

An expense allowed as a reduction of taxable income.The most common individual deductions are for home mortgage interest,ad valorem and sales taxes,moving expenses associated with a job, charitable giving, and health-care costs. Virtually all expenses associated with income-producing property are deductible, including noncash expenses such as depreciation. Virtually all operating expenses for a business are deductible, except that capital expenditures (a new roof, expansion of building, purchase of equipment) must be capitalized and depreciated over time unless falling within the Section 179 limits. Section 179 lets a taxpayer deduct as expenses certain things that would otherwise have to be capitalized.

References in periodicals archive ?
During the three week period as Republicans rushed through a partisan anti-middle class and anti-New York tax bill, Schumer loudly and staunchly opposed the first proposed elimination, and then cap, of the state and local tax deductions, also known as SALT.
Gift tax deductions will be increased, reflecting inflation, from 30 million won to 50 million won for adults, and from 15 million won to 20 million won for minors.
As Congress and the president make deficit reduction a higher priority for the federal budget, Americans show solid opposition to eliminating common tax deductions.
Kaplow (1992b) argues that tax deductions for net losses are inefficient if the available insurance in the private market is based on proportional coverage.
Solution: Give non-itemizers a state tax deduction for their charitable contributions.
If each accrued liability account had a single dedicated expense account (not used in connection with any other liability account), the book expense and tax deduction related to that liability could be easily determined.
Edward Neuschler, a senior analyst at the Institute for Health Policy Solutions, notes that tax deductions are intended to reduce a household's taxable income.
Donors, by following available guidance and making careful selection of charities for their donations, can provide charity support while benefiting themselves through tax deductions or disposing of unwanted vehicles.
Ishi said the panel is expected to propose expanding the basic exemption amount to about 500,000 yen from the current 380,000 yen after abolishing and consolidating tax deductions in an effort to simplify the deduction system.
In 1988 the press reported that the Norwegian authorities were giving tax deductions on bribes Norwegian companies had paid in developing countries.
While transferring the liability to the captive provides additional cash flows by way of accelerated tax deductions, a further additional cash-flow benefit may be achieved through cost savings by accessing the "wholesale" markets as opposed to the "retail" insurance markets.
Kamoroff has now turned his small-business charm to work on the 2nd edition of 422 Tax Deductions for Businesses & Self-Employed Individuals--fully up-to-date for 1999 and the Year 2000 tax season.