tax deduction

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Tax deduction

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


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 ?
For most taxpayers, the tuition and fees deduction will be the third choice.
Therefore, the maximum federal income tax saving with the tuition and fees deduction is $1,000: 25% of $4,000.
What is the best way for the couple to utilize the AOTC, LTC, and the tuition and fees deduction to minimize their 2011 tax liability?
The tuition and fees deduction is available for qualified taxpayers whether or not they itemize deductions on Schedule A of their tax return.
but the tuition and fees deduction is a deduction from income in order to arrive at AGI.
This adjustment to income is claimed using Form 8917, Tuition and Fees Deduction, attached to Form 1040 or 040A.
Taxpayers that do not qualify for the tuition and fees deduction may be able to deduct education expenses as an itemized deduction if an employee, or as a business expense if self-employed.
Tuition and fees deduction. The tuition and fees deduction (TF deduction) requirements mirror the LLC requirements in many respects, including identification of the eligible student and QEEs, but the benefit is more generous in that the MAGI phaseout is higher.