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 ?
In 2016-17, the FBR deducted Rs76.870 million from Excise Department, Rs11.119 from Health Department, 290.499 million from Home Department, Rs415.891 million from Finance Department, Rs12.834 million from Board of Revenue and Rs9.821 million from Mines and Mineral Development Department.
However, there is an inherent tax benefit since fees deducted from an IRA are not subject to income tax.
At this, the court wondered why the withholding tax was being deducted from 140 million cellular subscribers.
It was pointed out that the FBR during the year 2014-15 at source deducted Rs816.267 million from Excise Department, Rs11.878 million from Board of Revenue, Rs6.662 million from Mines and Mineral department and Rs1.704 million Transport and Mass Transit Department.
All of the costs properly attributable to the development of software by the taxpayer are consistently treated as current expenses and deducted in full in accordance with the rules similar to those applicable under section 174(a) of the Code; or
However, because RMC and its 100% shareholder were related parties at the end of the tax years prior to 1994, section 267(a)(2) did control when the interest for those years should be deducted.
National Starch deducted these fees, but upon audit the IRS concluded that they should be capitalized.
Accordingly, his legal fees ($500,000) may be deducted only under Sec.
TEI urged the IRS and Treasury to promulgate general guidance on the important issue of whether certain expenditures may be currently deducted by taxpayers or, rather, must be capitalized.
62(a)(19), the amount that may be deducted above-the-line cannot exceed the amount includible in the taxpayer's gross income for the tax year on account of a judgment or settlement (whether by suit or agreement and whether as lump-sum or periodic payments) resulting from such claim.
On their individual 1993 to 1995 tax returns, Hawley deducted the payments and Gilbert did not include them in her gross income.
Memo 1992-504, the California-based taxpayer deducted its March 31st CFT accrual on each of its 1982, 1983, and 1984 tax returns.