Adjustments to Income

Items Covered in this Section Educator Expenses Received income from self-employment Paid a penalty for early withdrawal of savings Paid alimony Contributions to a traditional IRA Paid student loan interest Received income from jury duty that was turned over to an employer Paid college tuition

Educator Expense K-12 teacher, instructor, counselor, principal, or aide Employed at least 900 hours during school year Deduct $250 in qualified expenses Expenses exceeding$250 can be deducted on Schedule A Classroom materials (Books, supplies equipment)

Penalties Paid Taxpayers can deduct, from their income, penalties paid for withdrawing funds in a deferred interest account before maturity Certificate of Deposit See form 1099-INT or 1099-OID (Original Issue Discount)

Alimony Payment to a spouse or former spouse under a divorce Does not include child support Person paying alimony can subtract it as an adjustment to income

Student Loan Interest Smaller of $2,500 or the interest paid Gradually reduced based on filing status and MAGI Must be solely to pay qualified education expenses Cannot be from related person or made under a qualified employer plan

Student Loan Interest Reductions to Qualified Expenses Employer-provided educational assistance Tax-free withdrawals from Coverdell ESA U.S. savings bond excluded from income for qualified higher education expenses. Certain scholarships & fellowships Veteran’s educational assistance benefits Any other nontaxable payments

Tuition & Fees Deduction

Tuition & Fees Deduction Eligibility Taxpayer, spouse, dependent Cannot be claimed by a dependent or married filing separately If students are eligible to be claimed as a depended (even if not actually claims) and paid their own expenses, no one can take the adjustment. Students who do not qualify as a dependent can claim the deduction, even if tuition and fees were paid by someone else. (treat as gifts)