Deduction

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DEFINITION of 'Deduction'

Any item or expenditure subtracted from gross income to reduce the amount of income subject to tax.

Also referred to as "allowable deduction".

INVESTOPEDIA EXPLAINS 'Deduction'

For example, if you make $40,000 and you have a deduction for $1,000, then your taxable income is reduced to $39,000.

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    According to a December 2014 study published on Salary.com, the median salary for a tax manager was $110,440. PayScale.com ... Read Full Answer >>
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    Most tax preparation software does a good job. However, like any recipe, the end results are only as good as what goes into ... Read Full Answer >>
  3. Which is better for tax deductions, itemization or a standard deduction?

    Each deduction that you claim may result in a decrease in the amount of taxes that you owe. However, whether you receive ... Read Full Answer >>
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    There are some investing costs that can be written off each year, even if you aren't a day trader. The general rule in determining ... Read Full Answer >>
  5. How can I reduce the taxes on my inherited retirement assets?

    Many beneficiaries miss out on one of the most significant tax deductions for inherited retirement-plan assets; the income ... Read Full Answer >>
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    If you own a business, you are eligible to deduct certain business-related expenses. These include deductions for the following: Home ... Read Full Answer >>
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