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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 periodicals archive ?
In this scenario, all fees are deducted from the joint account.
Indeed, taxpayers that have consistently deducted software development costs under section 174(a) likely must treat year-2000 expenditures as deductions because section 6.
The acquirer deducted fees paid to the consulting firm for the merger study, and the cost of legal and professional services arising out of the appraisal proceeding.
Given the time necessary to develop the facts, research the legal issues, draft the ruling request, respond to government requests for additional information, and await a government ruling, the private ruling process will not be helpful or expedient in resolving issues; taxpayers often cannot even imagine that an issue exists until a revenue agent raises it because in many cases the expenditure has been routinely deducted and never challenged.
In addition, CFT is generally deducted in the income year for financial statement purposes.
89-17, requiring capitalization of all previously deducted costs of package designs, could be modified.
The additional deducted dollars create significant savings on business owners' 2002 personal tax returns, which could soften the blow of recession-time business losses.
221 deduction for any amount deducted under any other Code provision or for any amount excluded under Sec.
Square D deducted both the bank lees and the compensation payments.
com were unaware that certain job search expenses can in fact be deducted from federal taxes.
The taxpayer had deducted from his laundry partnership income, interest he paid on the unpaid balance of the purchase price of the partnership interest.
On its 1996 return Clarkston deducted $30,000 for these services; on its 1997 return it deducted $63,350.