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What Are Tax Deductible Expenses?

Donations to a tax-exempt charity are tax deductible.
Wages, advertising and capital improcements are among acceptable tax-deductibel expenses for a business.
If a taxpayer's building is damaged in a tornado, any amount not covered by liability insurance may be a tax deduction.
People who work from home often deduct office supplies as a business expense on their taxes.
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  • Written By: Renee Booker
  • Edited By: E. E. Hubbard
  • Last Modified Date: 21 April 2015
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In many tax systems throughout the world, taxpayers are allowed both business and personal tax deductible expenses to offset the amount of tax ultimately owed. In the United States, for example, business tax deductible expenses are usually expenses that are related to the production of income. Personal expenses that are deductible often include a predetermined deduction for the taxpayer and all dependents, medical and education expenses, as well as taxes, interest, and retirement contributions. Losses and gifts may also be considered tax deductible expenses.

Business expenses are frequently considered to be tax deductible expenses, as many governments want to encourage commerce and growth among the business sector. In simple economic terms, the old saying, "it takes money to make money" applies. While deductible expenses certainly apply to large corporations, they may apply to small businesses, as well as to home offices in the United States. Common examples of tax deductible expenses for a business may include wages paid to employees, advertising, capital improvements, and/or office supplies. Often, a taxpayer who works from his or her home may even deduct a portion of the expenses related to maintaining the home.

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Personal tax deductible expenses in the United States, as in many other jurisdictions, start with a set amount that the taxpayer may deduct for himself or herself, as well as for each dependent. In the United States, the personal deduction amount changes on a yearly basis. A taxpayer must, however, choose between taking the standard deduction amount or itemizing deductions.

If a taxpayer chooses to itemize deductions in the United States, he or she may use a significant portion of his or her out-of-pocket medical expenses incurred during the tax year. Interest paid on a mortgage loan may also be considered tax deductible, as are some expenses for post-secondary education. Contributions to many retirement plans are also often considered to be tax deductible expenses.

When a taxpayer makes a gift of money or something else of value to a charity, that gift may be tax deductible for both an individual or a business. Losses are another "expense" that may be deductible for both businesses and individuals in the United States. For purposes of a tax deduction, a loss is the term used to refer to losing money as the result of a theft, natural disaster, or other casualty. For example, if a taxpayer's home is damaged in a tornado or hurricane, any amount not covered by liability insurance may be a tax deduction.

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Drentel
Post 3

We, my wife and I, always donate whatever we can to tax deductible charitable organizations that do good work in the community. As far as we are concerned, it is better to spend the money on charities doing good work rather than to pay all of that money to the government. We have no control over where it goes and what it is used for once the government gets hold of it. At least with the charities we can see the benefits of the donations.

Animandel
Post 2

I am always searching for new expenses that we can write off as tax deductions. Years ago when my husband and I were just starting out in life as husband and wife, he lost his job. Needless to say, this was not a good situation for a young couple. Fortunately, he received another offer, and he interviewed, and the company hired him. That's the good news.

The bad news is that the job was three states away, and we had to move everything we owned. The moving costs would have been bad enough at any time, but they were more taxing because we had been living solely on my income for months.

At that time, I was not

aware of the tax deduction for moving expenses, but I was looking for any type of deduction, and I learned that some of our moving expenses could be deducted from our taxes since they were work related. At that time, the deduction made a big difference to us financially.
Feryll
Post 1

Normally, I am rushing at the last minute to complete my taxes, and I am so happy to get them completed that I don't bother to fill in any types of deductions. I try to keep the process as simple as possible, so I can finish on time.

A friend was telling me just how much he saves on his taxes by taking simple deductions that many people can claim, but seldom do. Now that we have purchased a house, I am taking more interest in the possible deductions. I am pleased to read in this article that a portion of the home mortgage may be tax deductible. Just from reading this article I am seeing possible deductions that I never considered.

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