Alabama allows several adjustments to income that may reduce your Alabama taxable income. Use this section to enter any deductions or adjustments that apply to your tax situation.
Pathway to this entry is:
Alabama State Return > Adjustments to Income
What Is the Adjustments to Income Section?
The Adjustments to Income section is used to enter deductions that Alabama allows in addition to those already included on your federal return.
Depending on your situation, you may be eligible to claim one or more of the adjustments listed below.
Alabama Schedule RS (Retirement Schedule)
Schedule RS is used to review retirement income reported on Federal Form 1099-R and determine the amount that is taxable or exempt for Alabama purposes.
Pathway to this entry is:
Alabama State Return > Adjustments to Income > Alabama Schedule RS (Retirement Schedule)
How Do I Complete Schedule RS?
- Select the Federal Form 1099-R you would like to review.
- Indicate whether the retirement distribution is exempt from Alabama tax.
- Review the taxable amount transferred from the federal return.
- If necessary, enter a different Alabama taxable amount.
The program automatically pulls the taxable amount from the Federal Form 1099-R. If Alabama treats the distribution differently, you may adjust the Alabama taxable amount.
What Retirement Income May Be Exempt?
Certain retirement distributions may qualify for favorable Alabama tax treatment.
Common examples may include:
- Certain government retirement plans.
- Qualified pension plans.
- Other retirement benefits that are exempt under Alabama law.
Review your retirement documents carefully before determining whether the distribution is exempt.
What Information Will I Need?
You may need:
- Form 1099-R.
- Pension statements.
- Retirement plan documentation.
- Information identifying the source of the retirement income.
Qualified Adoption Expenses
Enter qualified adoption expenses paid or incurred during the tax year.
Examples may include:
- Adoption fees.
- Court costs.
- Attorney fees.
- Travel expenses directly related to the adoption process.
Keep supporting documentation with your tax records.
Alabama PACT or College Education Savings Contributions
Enter contributions made during the tax year to:
- Alabama PACT (Prepaid Affordable College Tuition Program).
- Alabama College Education Savings accounts.
Only enter qualifying contributions made during the tax year.
Qualifying Health Insurance Deduction
Enter qualifying health insurance premiums paid for certain eligible employer-provided health insurance plans.
Only qualifying premiums should be entered.
Costs to Retrofit or Upgrade a Home to Resist Wind or Flood Damage
Enter qualifying expenses paid to improve a residence's resistance to wind or flood damage.
Examples may include:
- Storm-resistant roofing.
- Storm shutters.
- Structural reinforcements.
- Other qualifying mitigation improvements.
Retain documentation supporting the improvements.
Deposits to a Catastrophe Savings Account
Enter qualifying deposits made to an Alabama Catastrophe Savings Account during the tax year.
These accounts help homeowners save for future catastrophe-related expenses.
Contributions to a Health Savings Account (HSA)
Enter qualifying contributions made to a Health Savings Account.
You may need information from:
- Form 5498-SA.
- HSA account statements.
- Employer contribution records.
Only eligible contributions should be entered.
Contributions to an Achieving a Better Life Experience (ABLE) Savings Account
Enter qualifying contributions made to an ABLE account.
ABLE accounts are designed to help individuals with disabilities save for qualified disability expenses.
Keep records of all contributions made during the year.
Firefighter's Insurance Premiums
Enter qualifying firefighter insurance premiums if eligible for the Alabama deduction.
Only premiums that qualify under Alabama law should be entered.
Retain documentation supporting the deduction.
How Do Adjustments to Income Affect My Return?
Adjustments entered in this section may:
- Reduce Alabama taxable income.
- Lower Alabama tax liability.
- Increase an Alabama refund.
- Reduce the amount owed with the return.
The benefit depends on the type and amount of adjustment claimed.
Important Information
- Alabama 1099-R information transfers automatically from the federal return.
- Schedule RS should be reviewed whenever retirement income is reported on a Form 1099-R.
- Only enter amounts that qualify under Alabama law.
- Some adjustments may require supporting documentation.
- Keep copies of records supporting all deductions and adjustments claimed on the return.
Additional Information
Review all retirement documents, Forms 1099-R, adoption records, education savings contributions, HSA records, ABLE account contributions, insurance premiums, and other supporting documents before completing the Adjustments to Income section. Accurate entries help ensure your Alabama return is calculated correctly.