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Adjustments to Income
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An adjustment to income offsets taxable income dollar for dollar.  Like losses, this money that comes off the top to determine your "Adjusted Gross Income”; which determines eligibility for many tax deductions and credits.

Common Adjustments to Income:

  • Certain educator expenses
  • Certain business expenses of Reservist, Performing Artists and "fee-based” government officials
  • Health Savings Account deduction
  • Certain moving expenses
  • Alimony paid
  • Domestic Production Activities—for certain trade and business activities, including farming, oil, film production (you know who you are)

Adjustment to Income subject to Adjusted Gross Income limits:

  • Deductible IRA contributions
  • Student Loan interest
  • Tuition and fees

Adjustments to Income for the self-employed:

  • Portion of self-employment tax
  • Health Insurance deduction
  • Retirement plan contributions

<NEXT:  Credits vs. Deductions>

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