tax deduction


Tax 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 ?
To claim a tax deduction, you need to give a certificate ( in a prescribed format) of treatment from doctors of government hospitals.
If you suffer 'a disability that is not less than 40%', you can claim a tax deduction up to Rs 50,000 per year, or Rs 1 lakh for severe disability ('80% or more').
Although the IRS does not always make accounting easier when it issues new revenue procedures, it appears that they have handed a huge win to all taxpayers who can claim tax deductions under 179D.
In the section on "Optimal Tax Deductions for Net Losses," we examine the optimal tax deduction under private insurance with a policy limit.
Thus having an accurate number for the accrued benefit expense and tax deduction is not possible without significant allocations that, even if affected, would appear to be of little value.
Their legislation includes both a tax deduction for long-term care insurance premiums and a tax credit of $1,000 in 2004 for people who require at least six months of long-term care during the year.
This allows you to receive the full market value of the asset as a tax deduction, avoid capital gains taxes, and remove highly valuable assets from your taxable estate.
The bank extended the loans through foreign banks by making use of the foreign tax deduction system, as taxes on such loans were lower.
According to meeting participants, Koizumi cited the possibility a review of the income tax deduction system will lead to reduced income tax rates, but did not make any reference to cutting the current 5% consumption tax or lowering the minimum taxable income.
A few weeks later, he announced that he was ending tax deduction for bribes and this became law two years later.
The current value of a tax deduction for a premium payment, as opposed to a similar deduction for losses paid in future years, adds value to the economics of a self-insurance transaction.