R1 Individuals- M4 - Adjustments Flashcards
1 Adjustments for AGI 2 Individual Retirement Accounts: Part 1 3 Individual Retirement Accounts: Part 2 4 Adjustment for Slef employed Taxpayers
How many years may the individual deduct a portion of the student loan interest?
Taxpayers may deduct student loan interest (above-the-line for AGI) paid on QUALIFIED EDUCATIONAL LOANS up to a maximum of $2,500 for the tax year.
To claim - Single’s MAGI should be $ 95,000 or less and Married filing Jointly’s MAGI of $ 195,000 or less
The deduction phases out for single filers with MAGIs of $80,000 to $95,000 and joint filers with MAGIs of $165,000 to $195,000
What is the amount deductible by SELF employed individual for SEP IRA?
A Simplified Employee Pension (SEP) IRA, or Simplified Employee Pension Plan, is a tax-advantaged retirement plan that allows business owners to contribute to retirement accounts for themselves and their employees.
2024 Threshold of $ 69,000 or 20% of Net Earnings
NE= SE AGI - 1/2 of SE Tax
Student Loan Interest expense as AGI Adjustment
Threshold : $ 2,500
Phased out at AGI
Single HH- 80K to 95k
MFJ- 165K to 195k
Allowed for interest paid during the time period
Parents paying their child’s student NOT allowed to claim deduction
Student loan should be used for Qualified educational expenses ONLY
HEALTH SAVINGS ACCOUNT ( HSA)
AS AGI ADJUSTMENT
Max deduction for payments made incurred for Medical expenses under HSA.
Single $ 4,150
Family $ 8,300
Addtl deduction of $ 1k for 55 y.o and older
High Ded Plan means
Deductibles of
S- $1.6k
F- 3.2k
OPE
S- 8,050
F- 16,100
Contribution to Traditional IRA , is this deductible from Gross Income to arrive at AGI?
In 2024, taxpayers can contribute and deduct up to $7,000 per tax payer per year to an IRA.
The contribution amount is limited to the taxpayer’s earned income (earned income of the married couple if filing a joint return).
For couples filing a joint return where at least one spouse is an active participant in a retirement plan, the deductible portion of the contribution is phased out.
For a spouse who is an active participant, the phase-out range in 2024 begins at AGI of $123,000.
For a spouse who is not an active participant, but is married to someone who is, the phase-out range in 2024 begins at $230,000.
The couple’s earned income for IRA purposes here is $45,000 ($40,000 salary + $5,000 taxable alimony), which is below both phase-out ranges, so each spouse receives a deduction of the $5,000 contribution actually made.
How are Capital Losses Treated? Max 3k
Capital losses in excess of capital gains are deducted (up to $3,000) on Form 1040 before the calculation of adjusted gross income.
You can carry them forward indefinitely
Accordingly, this is a deduction to arrive at adjusted gross income.
Moving Expenses
Are only deductible by members of the U.S. armed forces on active duty when moving pursuant to military orders.
