Deduction

Deduction means:
an amount allowed to taxpayers under the Internal Revenue Code as an offset against gross income or Adjusted Gross Income.

See also other Tax Terms and Definitions in U.S.A.

itemized deductions; standard deduction. Either the standard deduction or the itemized deduction is subtracted from your gross income to calculate your taxable income. For DEDUCTION AT SOURCE, see: Withholding tax.

In other words, it is the expense the taxpayer are permitted to subtract from his or her taxable income before figuring his or her tax bill. All taxpayers may claim a standard deduction amount – $11,400 for 2010 joint returns, for example, half that amount on individual returns. For 2011, the standard deduction for married couples will be $11,600 and, for singles, $5,800. Higher amounts are allowed to those age 65 and older and the blind. If his or her qualifying expenses exceed his or her standard deduction, the taxpayer may claim the higher amount by itemizing his or her deductions. Although no records are needed to back up his or her right to the standard deduction, the taxpayer must maintain records of qualifying expenditures if the taxpayer itemize. A restriction on deductions for higher-income taxpayers has been repealed.

U.S. and other Developed Countries International Tax Meaning

Deduction denotes, in an income tax context, an item which is subtracted (deducted) in arriving at, and which therefore reduces, taxable income.

Tax Deductions Main Issues

• Casualty and Theft Losses
• Charitable Contributions
• Interest
• Medical and Dental Expenses
• Miscellaneous Itemized Deductions
• Taxes

Major Tax Deduction Topics

• What is the standard tax deduction?
• Should I itemize tax deductions?
• How can we split our itemized tax deductions?
• Can I deduct alimony paid to my former spouse on my tax return?
• Are child support payments tax deductible?
• Home Office tax deductions. What is tax deductible?

Other Tax Deduction Topics

• How can I tell if a tax shelter is abusive?
• How much in capital losses can I deduct on my tax return?
• What property can be depreciated?
• I bought a home this year. What can I deduct on my tax return?
• Can I deduct home repairs or improvements on my tax return?
• Are investment expenses tax deductible?
• What about IRAs?
• What are Roth IRAs?
• What are SIMPLE IRAs?
• What are the reductions in itemized tax deductions?
• Are passive activity losses tax deductible?
• Where can I find the per diem rates?
• Can I claim rental expenses on my tax return?
• Can I deduct worthless securities on my tax return?
• Are hobby losses tax deductible?

See Also

See the entries Income Tax and State Income Tax in the American Encyclopedia of Law.

Domestic Production Activities Deduction, Form 8903 Issue

You may find information about Domestic Production Activities Deduction, Form 8903 in this Tax Platform of the American Encyclopedia of Law.