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 ?
Children with income get a standard deduction amount, above which they're taxed at 15 percent, 28 percent and so on, regardless of your tax situation.
The impact of the homeowner deduction in promoting home ownership is debatable.
Without an accurate record of each trip's distance, taxpayers are unable to get this valuable deduction.
Prohibition against taking distribution costs into account for purposes of determining the depreciation deduction using the income forecast method;
Simply stated, the amount of the charitable deduction is computed by determining the difference between the fair market value of the property before and after the granting of the conservation easement.
The tax deduction was advocated both to ensure that the state Bureau of Revenue treats all health insurance equitably for tax purposes and as an incentive for purchase of long-term care policies.
Consequently, the Institute commends the IRS for concluding in the proposed regulations that in appropriate cases charitable contribution deductions can be definitely related to a class of gross income.
As long as the at-home work is the most significant part of your business, you can qualify for home office deductions by showing that you spend more time working at home than at other locations.
In addition to reducing AGI, review your itemized deductions to slash taxable income further.
With 9ci's Deduction & Collection System (DCS), we will be much more proactive in managing our accounts receivables," says Carl McMaken, Corporate Credit Manager of Delta Faucet.
Congress repealed the reserve method for chiming bad-debt deductions in the belief that allowing deductions for future losses was inconsistent with the treatment of other deductions under the all-events test, in that it permitted a deduction larger than the present value of the losses.