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.
An itemized deduction allowed for donations made to qualifying charities. Several limitations apply to this deduction, especially for noncash property donations.
Deductions from Gross Income refer to the allowable reductions from an individual's gross income to arrive at their taxable income, applicable within the framework of personal income tax.
Insurance premiums are the amounts paid to an insurance company to cover potential hazards. These payments can have tax implications and differ in deductibility based on whether they are made by businesses or individuals.
Itemized deductions are specific, individualized tax deductions allowed under provisions of the Internal Revenue Code and state and municipal tax codes for particular expenses incurred by the taxpayer during the taxable year. These deductions are permitted in computing taxable income, but there is an overall limitation on certain itemized deductions. An alternative to itemizing deductions is to claim the standard deduction.
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.
Medical Expense Deduction refers to the allowable itemized deduction by individuals for unreimbursed payments for medical care, prescription drugs, and medical insurance premiums, limited to the amount that exceeds 7.5% of the taxpayer's adjusted gross income (AGI).
