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


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.


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.


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.


An amount that may be subtracted from income that is otherwise taxable.
References in classic literature ?
If one has a taste for that kind of thing the merest starting-point becomes a coign of vantage, and then by a series of logically deducted verisimilitudes one arrives at truth--or very near the truth--as near as any circumstantial evidence can do.
What made it all so difficult was that Dounia received a hundred roubles in advance when she took the place as governess in their family, on condition of part of her salary being deducted every month, and so it was impossible to throw up the situation without repaying the debt.
A FEW weeks ago, British Gas sent out letters stating that the winter rebate of pounds 30 a lot of customers were entitled to was stopping; however, it would still be deducted from the Jan-April bill.
Typically, prepaid medical expenses are not deductible in the year of payment; generally, they cannot be deducted until services have been rendered.
Salaries and royalties from the film's stars also are deducted to arrive at net profit.
The Ostrows, who were subject to AMT, deducted real estate taxes paid by the coop on their joint return; the IRS disallowed the deduction.
Furthermore, if all investments were expensed and deducted from income, then the tax system would become a consumption tax because consumption equals income minus investment.
Both countries argued their systems were fairer, preventing distortions of competition, however the ECJ said VAT had to be levied and deducted in full regardless.
The Bush administration had held long talks with the Israeli government over the sum to be deducted and agreement was reached between US national security adviser Ms Rice and PM Sharon adviser Dov Weisglass.
Although the landlord is entitled to deduct these payments, the law is unclear on whether the payments can be deducted either when they come due or ratably over the term of the new lease.
The catch: Yearly contributions of up to $2,000 per person cannot be deducted from taxes.