Deduction(redirected from deductions)
Also found in: Dictionary, Thesaurus, Medical, Legal, Idioms, Encyclopedia.
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.