Final answer:
Deductions are expenses subtracted from adjusted gross income to determine taxable income. Understanding these concepts is essential for personal and business taxation knowledge.
Step-by-step explanation:
The question 'Unfortunately, these were discounted from the tax returns' refers to items not included in the taxable income calculation. In the context of the tax returns, the term that fits best is a) Deductions.
Taxable income is determined by subtracting deductions and exemptions from one's adjusted gross income. Deductions can include expenses like mortgage interest, state taxes, and charitable contributions, which are subtracted from gross income before taxes are calculated. The Standard Deduction and personal Exemptions further reduce taxable income.
The complexity of these tax concepts demonstrates the necessity to understand basic taxation principles, especially as they relate to personal income tax, which affects the income reported and the taxes owed by an individual or business.