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Federal Tax Adjustment Information & Tips
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Income adjustments available on your 2023 Form 1040
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 I am a teacher. I bought some books and other learning tools for my classroom. Are any of these expenses deductible? |
| If you are an educator, you may be able to deduct up to $250 of expenses you paid for purchases of books and classroom supplies, even if you do not itemize your deductions. These out-of-pocket expenses may lower your tax bill. |
| Eligible Expenses - The deduction is available if you are an eligible educator in a public or private elementary or secondary school. To be eligible, you must work at least 900 hours during a school year as a teacher, instructor, counselor, principal, or aide. |
| Qualifying Expenses - You may subtract up to $250 of qualified expenses when figuring your adjusted gross income. Qualified expenses are expenses not reimbursed by your employer that you paid for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you used in the classroom. For courses in health and physical education, expenses for supplies are qualified expenses only if they are related to athletics. |
To be deductible, the qualified expenses must be more than the following amounts for the tax year:
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You must reduce your qualified expenses by the following amounts:
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| I made contributions to an IRA throughout the year. Are any of these contributions deductible? |
| For 2023, your total contributions to all of your traditional and Roth IRAs cannot be more than $6,500 or compensation received for rendering personal services. For taxpayers age 50 or older, the limit increases to the lesser of $7,500 or compensation. |
| Compensation includes: |
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| Compensation does NOT include: |
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| Generally, you can deduct the lesser of either what you contributed to your Traditional IRA, or the general limit regarding how much can be contributed. You can figure your deduction using the worksheets in the instructions for Form 1040. |
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| Is the interest I paid on my student loans deductible? |
| You may be able to deduct up to $2,500 for interest you pay on a qualified student loan. And, if your student loan is canceled, you may not have to include any amount in income. The deduction is claimed as an adjustment to income, so you do not need to itemize your deductions. |
| A qualified student loan is a loan you took out solely to pay qualified higher education expenses. The expenses must have been: |
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| Qualified higher education expenses are the costs of attending an eligible educational institution, including graduate school. The costs of attendance are determined by the eligible educational institution and include tuition and fees, an allowance for room and board, and an allowance for books, supplies, transportation and miscellaneous expenses. The student must have been enrolled in a degree, certificate, or other program leading to a recognized educational credential at an eligible education institution and must have carried at least one half of a normal full-time work load for the course of study being pursued. |
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| You cannot claim the deduction if: |
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| I am paying for my own college. Can I take any type of deduction for my college tuition that I've paid this year? |
| The Tuition and Fees deduction expired as of December 31, 2020 and has not been extended as of date. You may still qualify for an education credit. You may be able to deduct up to $4,000 for qualified tuition and related expenses that you pay for yourself, your spouse, or a dependent. Expenses that qualify are tuition and fees required for enrollment or attendance at an accredited college, university, vocational school, or other post-secondary educational institution that is eligible to participate in a student aid program administered by the Department of Education. Qualified expenses may include fees for books, supplies, and equipment only if the fees must be paid to the school for the student's enrollment or attendance. In addition, qualified expenses may include student activity fees if the fee must be paid to the school for the student's enrollment or attendance. |
| You do not have to itemize to take this deduction because it is treated as an adjustment to your income. You can claim qualified tuition and fees as either an adjustment to income, or as the American Opportunity or Lifetime Learning credit. You cannot do both. |
| You cannot claim a deduction or credit based on expenses paid with tax-free scholarships, fellowships, grants, or education savings account funds such as a Coverdell education savings account, tax-free savings bond interest or employer provided education assistance. The same rule applies to expenses you pay with a tax-exempt distribution from a qualified tuition plan, except that you can deduct qualified expenses you pay only with that part of the distribution that is a return of your contribution to the plan. Also, you cannot deduct qualified education expenses you deduct anywhere else on your return. |
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| I moved so I could take a new job, can I claim moving expenses on my return? |
| As of December 31, 2022, moving expenses are deductible only if you are a member of the Armed Forces on active duty and, due to a military order, you move because of a permanent change of station. |
| You can deduct the reasonable expenses of moving and/or storing your household goods and personal effects. You can also deduct the expenses of traveling to your new home, including your lodging expenses. You cannot, however, deduct meals. |
| Moving expenses are figured on IRS Form 3903 and deducted as an adjustment to income on Form 1040, Schedule 1. You cannot deduct any moving expenses that were reimbursed by your employer. |
| For additional information, refer to the IRS Form 3903 Instructions and IRS Publication 521, Moving Expenses. |
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| I've read that if you are self-employed, you can deduct some of the self-employment taxes paid. What are the rules regarding this? |
| If you have net earnings from self-employment of $400 or more, you are required to file Schedule SE along with your Form 1040. Line 7a of Schedule SE is a deduction for one-half of self-employment tax. Once half of your self-employment tax is figured, it can be reported on Line 15 of Schedule 1. |
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| What are the rules regarding the Self-Employed Health Insurance Deduction? |
| Up to 100% of health insurance premiums paid on behalf of the sole proprietor, spouse and dependents may be deducted on line 29 on Schedule 1 as an adjustment to income. The deduction is limited to the net profit from Schedule C minus the deductions for one-half of Self Employment tax, Keogh, SEP, and SIMPLE contributions. Do not include any amount deducted on line 16 of Schedule 1 in figuring the medical expense deduction on Schedule A (Form 1040). The deduction is not allowed for any month that the self-employed individual or the spouse is eligible to participate in a subsidized health plan maintained by an employer. The rules apply to self-employed persons, general partners (or limited partners receiving guaranteed payments), and S corporation employees who are more-than-2% shareholders. |
| Qualified long-term care insurance contracts will generally be treated as accident and health insurance contracts for purposes of the Self-Employed Health Care Deduction. |
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| I'm divorced. According to our divorce agreement, I'm required to pay my ex-wife alimony. Are these alimony payments deductible on my taxes? |
| If you made payments to or for your spouse or former spouse under a divorce or separation instrument entered into on or before December 31, 2018, you maybe able to take this deduction. You can't take a deduction for alimony payments you made to or for your spouse if you entered into your divorce or separation agreement after December 31, 2018, or if you entered into the agreement on or before December 31, 2018, and the agreement was changed after December 31, 2018, to expressly provide that alimony received is not included in your former spouse's income. |
| Payments that qualify as alimony are deductible by the payer spouse and are taxable to the payee spouse. All references to alimony under a divorce decree also apply to separate maintenance payments under a separation agreement. |
| To qualify as alimony: |
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| Payments that do not qualify as alimony are as follows: |
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| Line 11 on Schedule 1 says business expenses for certain individuals. What exactly is this adjustment for, and who qualifies for it? |
| Government officials paid on a fee basis, qualified performing artists, and Armed Forces reservists can claim business expenses as an adjustment to income. Disabled employees can deduct impairment related expenses as other itemized deductions on Form 2106 not subject to the 2% AGI limitation. |
| Individuals who are employed by a state or local government and paid in whole or in part on a fee basis are considered to be government fee basis officials. |
| National guard members and Armed Forces reservists who must travel more than 100 miles away from home and stay overnight to fulfill their training and service commitments can claim an above-the-line deduction for the cost of transportation, meals (subject to the 50% disallowance rule) and lodging. The deductible amounts are limited to general federal government per diem amounts for the applicable locale. Form 2106 is used to report eligible expenses for government fee basis officials, qualified performing artists, and reservists. The expenses are then entered on line 24 of Schedule 1. The amount is included in the total of adjustments to income. |
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| What is a Health Savings Account? What are the benefits of opening a Health Savings Account? Can any contributions be deducted? |
| A Health Savings Account (HSA) is a tax-exempt trust or custodial account that you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. No permission or authorization from the IRS is necessary to establish an HSA. When you set up an HSA, you will need to work with a trustee. A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. The HSA can be established through a trustee that is different from your health plan provider. |
| You must be an eligible individual to qualify for an HSA. To be an eligible individual and qualify for an HSA, you must meet the following requirements: |
| You have a high deductible health plan (HDHP), on the first day of the month. A HDHP has a higher annual deductible than typical health plans, and a maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. Out-of-pocket expenses include co-payments and other amounts, but do not include premiums. |
| You have no other health coverage except what is permitted under other health coverage. This includes additional insurance that provides benefits only for the following items: Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property, a specific disease or illness, a fixed amount per day (or other period) of hospitalization. You can also have coverage (whether provided through insurance or otherwise) for the following items: accidents, disability, dental care, vision care, and long-term care. Plans in which substantially all of the coverage is through the above listed items are not HDHPs |
| You are not enrolled in Medicare. |
| You cannot be claimed as a dependent on someone else's tax return. (If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an HSA contribution. This is true even if the other person does not actually claim the deduction.) |
| You may enjoy several benefits from having an HSA. Some of those benefits include: |
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