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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

Deduction

An amount that may be subtracted from income that is otherwise taxable.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary
References in periodicals archive ?
The new law follows the same rule as 2004 as to the basic standard deduction for joint returns: twice the basic standard deduction for single returns, effective for 2005-08.
[sections] 1.861-8(e)(9)(iv), which has been in effect since 1977, provides that the deduction for charitable contributions allowed by section 170 will "generally" be considered as not definitely related to any gross income.
For example, if you're itemizing deductions, double-check your medical expense total for often overlooked items such as prescription medicines, mileage to doctor's appointments, eyeglasses and health insurance premiums.
Contributions to donor-advised funds and supporting organizations don't qualify A deduction for qualified contributions is allowed up to the amount by which the taxpayer's contribution base (AGI) exceeds the deduction for other charitable contributions.
Most people have used the standard deduction and that probably will continue to be true, even more so for 2018 returns.
Essentially, the legal fees and costs are afforded an above-the-line deduction.
Old Law: No special deduction limitations applied for contributions of clothing and household items.
(3) These regulations clarify a number of issues raised in the January notice and provide detailed guidance on the section 199 deduction, including more examples to illustrate the application of certain rules.
Certain types of equipment, purchased after May 5 qualify for bonus depreciation of 50% the value in addition to normal depreciation deductions, According to Largie, employing this end of-year strategy makes for significant tax savings, Dr.
In addition to experiencing fewer increases in deductions, companies who use cross-functional teams are more likely to actively take steps to deal with any increase in deduction volume.
Neuschler notes that most home owners paying for a mortgage already itemize their deductions, but rarely find it worthwhile to take advantage of deductions for medical expenses.
Skim the alphabetical list of deductions, and spot the ones that may apply to you.