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 ?
The ACT has a pending petition before the BIR for the scrapping of the 5% tax deduction on election service compensation.
The special energy efficiency tax deduction, 179D, has been extended to tax-paying businesses for 2017.
Personal spending-related income tax deductions will be applied to taxes owed instead of income, which will increase the tax burden of high income earners.
As Congress and the president make deficit reduction a higher priority for the federal budget, Americans show solid opposition to eliminating common tax deductions. Opposition is high regardless of whether the elimination is designed to help lower the overall tax rate or reduce the deficit.
Kaplow (1992b) argues that tax deductions for net losses are inefficient if the available insurance in the private market is based on proportional coverage.
If there are regular tax deductions that will be added back for AMT purposes and that a taxpayer has flexibility in paying (for example, state and local taxes), delay paying these taxes until next year to avoid a current-year AMT liability.
And the president punted on the part of his "compassionate conservative" agenda that would have done the most to increase private giving: a federal tax deduction for non-itemizers (i.e.
The Canadian federal government has reached an out-of-court settlement allowing investors to keep tax deductions that they received from investing in the country's film-related tax shelters.
Inventoriable costs is another area of difficulty in separately identifying book expense and tax deductions. Such costs are included on the ledger and mapped into the tax software without reflecting changes in ending inventory.
Nursing Homes/Long Term Care Management asked several nationally recognized experts on healthcare financing to comment on the differences between a long-term care policy based on tax deductions, such as the Bush administration proposal, and one based on tax credits.
Therefore, to make informed decisions about donating their vehicles, taxpayers should be aware of how vehicle donation programs operate, the role of fund- raisers and charities in the vehicle donation process, and IRS rules and regulations regarding allowable tax deductions. Due to the increased use of vehicle donation programs, GAO was asked to describe (1) the vehicle donation process, (2) the amount of proceeds received by charities and fund-raisers, (3) donor tax deductions, and (4) taxpayer cautions and guidance.
The government's tax panel will propose consolidating and abolishing a variety of tax deductions as measures for comprehensive tax reforms, the panel head said Thursday.