Adjustments for AGI Flashcards
Basic list of deductions FOR AGI (11)
(1) Educator Expenses
(2) Traditional IRA Contributions
(3) Student Loan Interest
(4) Health Savings Account
(5) Self-employment Tax Deductible portion
(6) Self-employed Health Insurance Premiums
(7) Self-employed Retirement Plan Contributions
(8) Penalty on Early Withdrawal of Savings
(9) Alimony paid (Agreement before 2018)
(10) Attorney fees paid in certain discrimination cases
(11) Moving Expenses (Armed Forces only)
Who is an eligible educator for educator expense deduction purposes and how much can be deducted?
An eligible educator is a K-12 teacher, instructor, counselor, principal, or aide working in a school for at least 900 hours. They may deduct up to $300 of qualified expenses.
How much student loan interest can be deducted?
A max of $2,500 can be deducted, subject to a phaseout. Completely phased out for singles at $95,000 (2024)
Rules regarding who can claim student loan interest deduction?
Can’t be claimed by dependent.
Can only be claimed by those legally obligated to pay the loan. (Can’t be deducted by parents paying for child)
Loan requirements for student loan interest deduction to apply?
Must be loan used for qualified education expenses.
How much may be deducted on contributions to HSAs?
$4,150 for 2024. Increased by $1,000 for those 55 and older. No contributions allowed once taxpayer is covered by Medicare A or B.
When may HSA distributions be excluded from income? What is the penalty for nonqualified distribution?
Distributions from HSA may be excluded if used to pay for qualified medical expenses. Drugs must be prescribed by physician.
Distributions made prior to age 65 are included in gross income and subject to additional 20% tax penalty.
Considerations for Archer MSA accounts?
Similar to HSAs but can’t be formed after 2007 so might see old ones but won’t be common.
When can a taxpayer use the deduction for early withdrawal penalties?
When a taxpayer forfeits interest due to early withdrawal, forfeited interest does not offset interest income. Full interest is included, and forfeited portion deducted For AGI.
How much may be deducted for contributions to traditional IRAs?
The lesser of $7,000 (2024) or earned income.
When must a contribution to a traditional IRA be made to receive a deduction?
Must be made by the time the tax return is filed not counting extensions (April 15).
When are taxpayers required to take minimum distributions from a traditional IRA?
April 1 of the year after the taxpayer turns 73
Can a taxpayer deduct contributions to a traditional IRA if they participate in an employer-sponsored retirement plan?
Yes, but there is a phaseout based on AGI.
What deduction is available for self-employment tax?
Self-employed individuals may deduct 50% of their self-employment taxes.
What are the requirements for a self-employed taxpayer to deduct health insurance premiums and who may the plans cover?
The plan may cover the taxpayer, their spouse, and their dependents. The plan must be set up in the name of the self-employed taxpayer or their business.
