A deduction infers the removal or subtraction of a quantity or item. The term tax deduction refers to the removal of an item that results in a lower tax liability in relation to their taxable income. These deductions denote expense items that were incurred throughout a financial year. The taxpayer is then able to remove or subtract these expense items to ascertain the amount owed to the government as taxes for that year. A taxpayer is any employed or self-employed person, who based on their status, is required to make tax payments to the government, while a tax payment is any mandated amount due to the government from one’s tabulated income.
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