Adjustments are certain expenses which can directly reduce your total taxable income. These items are not included as Itemized Deductions and can be entered independently.
Medical Savings Account
The medical savings account deduction (Form 8853) is used by taxpayers to:
- Report Archer MSA contributions (including employer contributions)
- Figure your Archer MSA deduction
- Report distributions from Archer MSA's or Medicare Advantage MSA's
- Report taxable payments from long-term care (LTC) insurance contracts
- Report taxable accelerated death benefits from a life insurance policy
For additional information about this deduction, please refer to Form 8853 Instructions.
Educator Expense Deduction
If you are an educator, you may be able to deduct up to $300 of expenses you paid for purchases of books and classroom supplies for 2022 tax year (up to $250 for previous years), even if you do not itemize your deductions, according to the IRS. These out-of-pocket expenses may lower your 2022 tax bill. Expenses incurred any time this year may qualify for the deduction. The deduction is available if you are an eligible educator in a public or private elementary or secondary school. To be eligible, you must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide.
For additional information about this deduction, please Click here.
If you are a member of a reserve component of the Armed Forces and you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you can deduct your travel expenses as an adjustment to income rather than as a miscellaneous itemized deduction. The deduction is limited to the amount the federal government pays its employees for travel expenses.
For additional information about this, please Click here.
Health Savings Account
Beginning in 2012, you can no longer make a qualified HSA distribution. A qualified HSA distribution is a one-time distribution from a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA) that is contributed by your employer directly to your HSA.
Taxpayers can claim this deduction to:
- Report health savings account (HSA) contributions (including those made on your behalf and employer contributions).
- Figure your HSA deduction,
- Report distributions from HSA's, and
- Figure amounts you must include in income and additional tax you may owe if you fail to be an eligible individual.
For additional information and to see who is eligible to file Form 8889, please Click here.
Beginning for the 2018 tax year, except for Military, individuals can no longer deduct moving expenses or exclude moving expense reimbursements from their employers for their income.
For additional information about moving expenses, please see IRS Publication 521.
Keogh Retirement Plan
A qualified employer plan set up by a self-employed individual is sometimes called a Keogh or HR-10 plan. A sole proprietor or partnership can establish a Keogh plan.
For additional information about this plan, please see IRS Publication 560.
Self-Employed Health Insurance Deduction
You may be able to deduct the amount you paid for health insurance for yourself, your spouse, and your dependents if any of the following applies:
- You were self-employed and you had a net profit for the year
- You used one of the optional methods to figure your net earnings from self-employment on Schedule SE
- You received wages in 2020 from an S Corporation in which you were a more-than-2% shareholder
Health insurance benefits paid for you may be shown in Form W-2, box 14. For more details see IRS Pub. 535 on the IRS website.
Penalty on Early Withdrawal of Savings or CD (Certificate of Deposit)
The Form 1099-INT or Form 1099-OID you received will show the amount of any penalty you were charged.
Please see IRS Publication 550 for additional information.
You may deduct the alimony or separate maintenance payments you are required to make to your spouse or former spouse, or to a third party on behalf of that spouse. More information on alimony, including rules for divorces and separations before 1985 and recapture rules, is available in IRS Publication 504 on the IRS website.
If you made contributions to a traditional IRA for 2022 you may be able to take an IRA deduction. However, you, or your spouse if filing a joint return, must report earned income to to claim the deduction. For additional information pertaining to an IRA Deduction, please see Publication 590.
Nondeductible IRAs (Form 8606)
File Form 8606 if any of the following apply.
- If you made nondeductible contributions to a traditional IRA for 2022
- You received distributions from a traditional, SEP or Simple IRA in 2022 and you made nondeductible contributions to a traditional IRA in 2022 or an earlier year. For this purpose, a distribution does not include a rollover, qualified charitable distributions, one-time distribution to fund an HSA, conversion, recharacterization, or return of certain contributions.
- If you converted part, but not all, of your traditional, SEP, and SIMPLE IRAs to Roth IRAs in 2022 (excluding any portion you recharacterized) and you made nondeductible contributions to a traditional IRA in 2022 or an earlier year.
Click here for further information.
Student Loan Interest Deduction
The maximum deductible interest on a qualified student loan is $2,500 per return. There is no deduction if you file as married filing separately. For more information Click here.
Tuition and Fees Deduction
Beginning in 2018, the Tuition and Fees deduction has been eliminated. Before tax year 2018, you may be able to deduct qualified tuition and related expenses that you pay for yourself, your spouse, or a dependent. You do not have to itemize to take this deduction because it is treated as an adjustment to income. You can claim qualified tuition and fees as either:
- an adjustment to income, OR
- an American Opportunity or Lifetime Learning credit
You cannot claim a deduction or credit based on expenses paid with tax-free scholarship, fellowship, grant, or education savings account funds such as a Coverdell education savings account, tax-free savings bond interest or employer-provided education assistance. The same rule applies to expenses you pay with a tax-exempt distribution from a qualified tuition plan, except that you can deduct qualified expenses you pay only with that part of the distribution that is a return of your contribution to the plan. Also, you cannot deduct qualified education expenses you deduct anywhere else on your return, such as a business expense.
Domestic Production (not available after 2020)
You may be able to deduct a percentage of your qualified production activities income from the following activities:
(1) Construction performed in the United States.
(2) Engineering or architectural services performed in the United States.
(3) Any lease, rental, license, sale, exchange, or other disposition of:
(a)Tangible personal property, computer software, and sound recordings that you manufactured, produced, grew, or extracted in whole or in significant part within the United States.
(b) Any qualified film you produced.
(c) Electricity, natural gas, or potable water you produced in the United States. For additional information, please see Form 8903 instructions.
Other Adjustments include Trade Readjustment Allowance, Jury Pay, Section 501(c)(18) Plan and Personal Property Rental Expenses, Certain Attorney Fees, etc.