What is a deduction?
Once you have calculated your adjusted gross income, you can subtract certain amounts of money from that income, lowering the amount of the income which will be used in calculating the taxes you actually owe. These subtracted amounts of money are known as deductions. When you take these deductions, you can do it in one of two ways. You can either take the standard deductionitemized deductions, which are manually calculated by you based on your actual expenses during the tax year.