tax deduction


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Tax deduction

An expense that a taxpayer is allowed to deduct from taxable income.

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.

tax deduction

See deduction.

tax deduction

An expense allowed as a reduction of taxable income.The most common individual deductions are for home mortgage interest,ad valorem and sales taxes,moving expenses associated with a job, charitable giving, and health-care costs. Virtually all expenses associated with income-producing property are deductible, including noncash expenses such as depreciation. Virtually all operating expenses for a business are deductible, except that capital expenditures (a new roof, expansion of building, purchase of equipment) must be capitalized and depreciated over time unless falling within the Section 179 limits. Section 179 lets a taxpayer deduct as expenses certain things that would otherwise have to be capitalized.

References in periodicals archive ?
This process gets very exciting if you have multiple non-taxed entities because the tax deductions to you can really add up.
* Consult with your tax advisor to make sure your gift is handled properly in order to claim your tax deduction. Additionally, talk to your financial professional to see how you can make donations that are aligned with your financial goals.
To claim a tax deduction, you need to give a certificate ( in a prescribed format) of treatment from doctors of government hospitals.
The limit of tax deduction is Rs 1 lakh per year if the dependant suffers from severe disability ('80% or more') or Rs 50,000 otherwise.
The tax deduction for corporate R&D reserves will be removed, and training and overseas education costs will no longer be tax-deductible.
Roughly 7 in 10 oppose eliminating the charity deduction, compared with about 6 in 10 who oppose getting rid of the mortgage interest and state and local tax deductions.
In the section on "Optimal Tax Deductions for Net Losses," we examine the optimal tax deduction under private insurance with a policy limit.
Most states also allow a state tax deduction for contributions to 529 accounts.
The tax deduction relates to an unutilised deficit during the income years 2002-2005.
Finally, Democrats say they'll seek a tuition tax credit worth up to $3,000 to replace a mish-mash of existing tax deductions. They maintain that the credit will be worth more, equivalent to a $12,000 tax deduction for most middle-class families.
Prior to January 1, 2006 people who purchased hybrids were allowed to take a $2000 income tax deduction, after that date, the deduction became even larger.