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Deductions and Adjustments

Tax terms for deductions that reduce income before or after the return reaches the taxable income stage.

Deductions and adjustments reduce the amount of income that ultimately gets taxed. This section is useful when you are comparing broad deduction types or trying to understand why two taxpayers with the same income can end up with different taxable income.

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What This Section Covers

  • The difference between using the standard deduction and listing eligible expenses individually.
  • Where deductions fit in the calculation chain between income and tax liability.
  • How deduction choices affect taxable income rather than acting like a direct credit.

In this section

  • Above-the-Line Deduction
    An above-the-line deduction is a deduction taken before taxable income is computed and commonly affects adjusted gross income directly.
  • Business Expense Deduction
    A business expense deduction is the deduction concept tied to qualifying business costs that reduce business profit on the return.
  • Charitable Contribution Deduction
    The charitable contribution deduction is the deduction concept tied to qualifying charitable gifts and often comes up in itemizing discussions.
  • Itemized Deduction
    An itemized deduction is a deduction claimed by listing qualifying expense categories instead of using the fixed standard deduction.
  • Mortgage Interest Deduction
    The mortgage interest deduction is the deduction concept tied to qualifying mortgage interest and is commonly part of itemized-deduction discussions.
  • Standard Deduction
    The standard deduction is a fixed deduction amount that reduces taxable income without requiring the taxpayer to itemize specific expenses.
  • Student Loan Interest Deduction
    The student loan interest deduction is a deduction concept tied to qualifying loan interest and is commonly discussed as an above-the-line deduction.