Section 2: Income & Assets Unit 11: Adjustments to Gross Income

Question 1

Educator Expense Deduction “Teacher Credit”

Answer 1

Eligible educator allowed to deduct up to $300 for classroom supplies or continuing professional development expenses.
MFJ for both teachers may deduct $600.

Only for teachers that work 900+ hours in elementary & secondary education. No college or pre-k.

Nonathletic supplies for PE, health class supplies, homeschooling does not count.

Question 2

Moving Expenses Deduction for Armed Forces

Answer 2

• Permanent change in station
• Form 3903

Question 2

HSA Contrib Rules

Answer 2

Any excess contribution over the limit is subject to a 6% penalty.
Any withdrawal used not for qualified medical expenses is subject to income tax and potentially 20% penalty (except if 65+, disabled, or dies)

Deduction is reported on Form 8889.

$3,850 for Self; $7,750 Family

55+ can contribute an extra $1,000

Question 3

SE Tax Deduction

Answer 3

Self-Employed taxpayer can subtract 50% of their SE tax (what an employer would normally pay), for Social Security & Medicare taxes.

CANNOT deduct 50% of the Additional Medicare Tax on earned income.

Question 4

SE Taxpayer Healthcare Insurance Deduction

Answer 4

SE taxpayer may be able to deduct 100% of healthcare insurance premiums.
Premiums paid by the taxpayer for a spouse & dependents under 27 are also deductible.

Must be either:
- SE and have net profit
- A partner in a partnership with net earnings from SE
- Have reicved wages from an S-Corp where they were a >2%+ owner.

• LTC ins premiums & Medicare premiums also count
• May NOT take if the taxpayer or spouse is eligible for an ER-sponsored plan

Question 5

Early withdrawal penalty deduction

Answer 5

-NOT FOR IRAs OR QUAL PLANS
- Just for CDs is tax deductible