Tax deduction is a reduction of income that is able to be taxed and is commonly a result of expenses, particularly those incurred to produce additional income.TaxdeductionFromWikipedia,thefreeencyclopediaJumptonavigationJumptosearchThisarticleisaboutthedeductionofexpensesforthepurposeofcalculatingtaxableincome.Fortaxdeductedatsource,seeWithholdingtax.Theexamplesandperspectiveinthisarticlemaynotrepresentaworldwideviewofthesubject.Youmayimprovethisarticle,discusstheissueonthetalkpage,orcreateanewarticle,asappropriate.(October2015)(Learnhowandwhentoremovethistemplatemessage)Taxdeductionisareductionofincomethatisabletobetaxedandiscommonlyaresultofexpenses,particularlythoseincurredtoproduceadditionalincome.Taxdeductionsareaformoftaxincentives,alongwithexemptionsandcredits.Thedifferencebetweendeductions,exemptionsandcreditsisthatdeductionsandexemptionsbothreducetaxableincome,whilecreditsreducetax.[1]Contents1Aboveandbelowtheline2Limitations3Businessexpenses3.1Costofgoodssold3.2Tradingorordinaryandnecessarybusinessexpenses3.3Accountingmethods3.4Limitsondeductions4Capitalizeditemsandcostrecovery(depreciation)5Non-businessexpenses5.1Losses5.2Personaldeductions6Groupsoftaxpayers7Internationalaspects8References9Furtherreading10ExternallinksAboveandbelowtheline[edit]Aboveandbelowthelinerefersitemsaboveorbelowadjustedgrossincome,whichisitem37onthetaxyear20171040taxform.[2]Taxdeductionsabovethelinelessenadjustedgrossincome,whiledeductionsbelowthelinecanonlylessentaxableincomeiftheaggregateofthosedeductionsexceedsthestandarddeduction,whichintaxyear2018intheU.S.,forexample,was$12,000forasingletaxpayerand$24,000formarriedcouple.[1][3]Limitations[edit]Often,deductionsaresubjecttoconditions,suchasbeingallowedonlyforexpensesincurredthatproducecurrentbenefits.Capitalizationofitemsproducingfuturebenefitcanberequired,thoughwithsomeexceptions.Adeductionisallowed,forexample,oninterestpaidonstudentloans.[1]Somesystemsallowtaxpayerdeductionsforitemstheinfluentialpartieswanttoencourageaspurcha