In general, amounts on a tax return that are deductible from gross income before arriving at Adjusted Gross Income (AGI), such as IRA contributions, half of the self-employment tax, self-employed health insurance deduction, Keogh retirement plan and self-employed SEP deduction, penalty on early withdrawal of savings, and alimony paid.
An intermediate step in calculating taxable income, AGI is the amount used for computing deductions based on, or limited by, a percentage of income, such as medical expenses, charitable contributions, and miscellaneous itemized deductions. This amount is determined by subtracting from gross income any business expenses and other deductions, such as KEOGH payments, alimony payments, and IRA contributions.
In the USA, the difference between the gross income of a taxpayer and the adjustments to income, which is an essential figure for multiple tax computations.
In the USA, alimony payments in a divorce settlement are treated as deductions from the adjusted gross income by the payer, but the recipient treats them as income for tax purposes.
A below-the-line deduction, also referred to as an itemized deduction, is a tax deduction that taxpayers can claim on their federal income tax returns. These deductions are subtracted from a taxpayer's adjusted gross income (AGI) to determine their taxable income, ultimately reducing the amount of tax owed.
A Coverdell Education Savings Account (ESA) is a type of Individual Retirement Account (IRA) designed to help parents save for their child's education expenses. These accounts allow for tax-free growth and withdrawals for qualified education expenses.
A deduction is an amount allowed to taxpayers under the Internal Revenue Code as an offset against gross income or adjusted gross income.
Dues and subscriptions refer to professional expenses that can be tax-deductible as miscellaneous itemized deductions, subject to specific regulations such as the 2% adjusted gross income (AGI) floor.
Expenses incurred while looking for a new job in the same line of work, whether or not a new job is found. These miscellaneous itemized deductions for tax purposes are subject to the 2% Adjusted Gross Income (AGI) floor. Expenses of search for one's first job after completing school are not deductible.
Modified Adjusted Gross Income (MAGI) is a measure used by the IRS to determine eligibility for certain tax credits, deductions, and additional taxes. It starts with Adjusted Gross Income (AGI) from federal Form 1040 and adds back certain tax-exempt interest income and other deductions.
The Personal Exemption Phaseout (PEP) reduces or entirely eliminates personal exemptions for high-income taxpayers based on their adjusted gross income (AGI).
Special work clothes are apparel required for the performance of one's job and are not suitable for wear outside of work settings. The cost of these clothes is a miscellaneous itemized deduction, subject to the 2% Adjusted Gross Income (AGI) floor.
