Deduction

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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 ?
Deduct a point if the team's sideline has a more elaborate cooling device than France.
If these facts are established, the taxpayer may be allowed to deduct employment taxes on vacation/bonus pay accrued at year-end, but not paid until the subsequent year.
82) Thus, corporations are now permitted to amortize costs attributable to obtaining debt financing for reacquiring its own (or a related party's) stock and deduct them over the term of the loan.
This leaves open the slight chance that if a future taxpayer can prove its postacquisition activities determined the amount paid to settle the assumed debt, it could deduct this amount.
You can't deduct job search expenses if you are looking for employment in a new occupation or there was a substantial break between the end of your last job and your search for a new one.
You can deduct the fair market value of your goods from your taxes - usually 15 percent to 20 percent of the original cost.
461-1(a)(2), the taxpayer should properly accrue and deduct the gross receipts tax imposed by the State of Maryland in the calendar year following the end of the income year.
The IRS announced September 12 that it would allow employers to deduct, without detailed documentation, up to 48.
In any case, the organization can then use the contribution to pay the legal fees, and deduct them as an ordinary and necessary business expense.
To avoid being "whipsawed"--having different tax treatments for each party result in its collecting no tax--the IRS inconsistently determined that Hawley could not deduct the payments and that Gilbert must include them in her gross income.
But what makes leasing even more attractive - and affordable - is that you can deduct the business use portion of the lease payments.