What is a "deduction"?

What is a "deduction"?

Steve Duben, CPA (Partner, Duben & Natividad) gives expert video advice on: What is a "deduction"?; What is a "standard deduction" and how much is it?; What is an "itemized deduction"? and more...

A deduction is something that you can deduct from your income to arrive at taxable income. Taxable income is a term that's used; that's the bottom line of the second page of the 1040 before you compute your income tax. A deduction is going to reduce your overall income. After the deduction has been taken away from your overall income, you're going to arrive at the taxable income, which you calculate your tax on. So, you want to use deductions to reduce it as much as legally possible.