Business Glossary

tax deduction allowed upon the transfer of property from one spouse to another. This deduction is allowed under the federal gift tax for lifetime transfers or under the federal estate tax for testamentary transfers of a decedent.

amount allowed to an individual taxpayer who does not elect to itemize deductions. This standard deduction is incorporated into the tax rate and table schedules. A taxpayer who elects to itemize deductions may deduct only the excess over the standard deduction amount to determine taxable income.

specific individualized tax deductions, allowed under provisions of the Internal Revenue Code and state and municipal tax codes for specific expenses incurred by the taxpayer during the taxable year (e.g., unreimbursed medical expenses, qualified residence interest expense, casualty loss, charitable contributions). These deductions are allowed in computing taxable income. There is an overall limitation on certain itemized deductions. An alternative is to claim the standard deduction.