Warning
Info
Warning
Info
Simple English definitions for legal terms
deductible
Read a random definition: subpermittee
A quick definition of deductible:
Deductible: A deductible is an amount of money that you have to pay before your insurance starts paying for things. For example, if you have a $1,000 deductible and you get into a car accident that causes $10,000 in damage, you would have to pay $1,000 and your insurance would pay the remaining $9,000. Deductibles can also be used to lower the amount of taxes you have to pay. Certain expenses, like charitable donations or healthcare costs, can be deducted from your taxable income, which means you'll owe less money in taxes.
A more thorough explanation:
Definition: A deductible is an amount of money that must be paid by an individual or organization before an insurance company pays out for claims. It can also refer to expenses that can be subtracted from taxable income to reduce the amount of taxes owed.
When someone has insurance, they may have to pay a certain amount of money out of pocket before the insurance company will pay for any damages or losses. This amount is called a deductible. For example, if someone has a car insurance policy with a $500 deductible and they get into an accident that causes $2,000 in damage, they will have to pay $500 and the insurance company will pay the remaining $1,500.
Some expenses can be deducted from taxable income, which can lower the amount of taxes owed. For example, if someone earns $50,000 in a year and has $5,000 in tax-deductible expenses, they will only have to pay taxes on $45,000 of their income. Tax-deductible expenses can include things like charitable donations, medical expenses, and business expenses.
It's important to note that the rules for tax-deductible expenses can vary depending on the jurisdiction and the type of tax. For example, the rules for deducting business expenses on a federal income tax return may be different from the rules for deducting business expenses on a state income tax return.