Question

Adjustments For and From AGI

Understanding the difference between these two deductions can be difficult at first. If you look at a Form 1040...adjustments For AGI are those that appear on Lines 23 through 35.  While adjustments From AGI appear on Schedule A as Itemized Deductions.

For this discussion, identify the following as adjustments for AGI, from AGI or neither.

Self-employed business expenses

State income taxes paid

Child support paid

Alimony paid

Out of pocket medical expenses

1/2 of Self-Employment Tax Paid

Credit card interest paid

Inheritance received

Answer 1

Adjustments For AGI are also known as above the line deductions. The following are Adjustments For AGI:

Self-employed business expenses (subject to terms and conditions. Not all expenses qualify)

Alimony paid

1/2 of Self-Employment Tax Paid

Itemized deductions are as follows:

Out of pocket medical expenses (subject to a 7.5% AGI floor)

State income taxes paid (upto $10,000)

The following fall under neither of the above two categories:

Credit card interest paid

Inheritance received

Child support paid