S2 Ep 2 BOSS Term Of The Week Write Off
S2 Ep 2 The Health Priority
“Write Off” – A write-off is a reduction of the recognized value of something. In accounting, this is a recognition of the reduced or zero value of an asset. In income tax statements, this is a reduction of taxable income, as a recognition of certain expenses required to produce the income. The term write-off may also be used loosely to explain something that reduces taxable income. As such, deductions, credits, and expenses overall may be referred to as write-offs.
Businesses and individuals have the opportunity to claim certain deductions that reduce their taxable income. The Internal Revenue Service allows individuals to claim a standard deduction on their income tax return. Individuals can also itemize deductions if they exceed the standard deduction level. Deductions reduce the adjusted gross income applied to a corresponding tax rate.
Tax credits may also be referred to as a type of write-off. Tax credits are applied to taxes owed, lowering the overall tax bill directly.
Corporations and small businesses have a broad range of expenses that comprehensively reduce profits required to be taxed. An expense write-off will usually increase expenses on an income statement which leads to a lower profit and lower taxable income.