Adjustment to Income

Adjustments to Income

In U.S. tax, deductions that reduce one's taxable income. When calculating a taxpayer's tax liability, one takes the amount of money he/she has made over the tax year and takes away deductions such as contributions to IRA accounts, business expenses, and so forth. One refers to these deductions as adjustments to income.

Adjustment to Income

An expense that may be deducted even if the taxpayer does not itemize deductions. Adjustments to income are subtracted from gross income to arrive at adjusted gross income.
References in periodicals archive ?
For Teachers -- Classroom Supply Expense Deductions: Teachers who purchase classroom supplies and are not reimbursed by the school can now deduct up to $250 as an adjustment to income through tax year 2007.
This benefit can be taken as an adjustment to income on the Form 1040.
Individuals can take this benefit as an adjustment to income and do not have to itemize deductions to claim it.
The deduction is 100% (for 2003) of the amount paid for medical insurance for the employee-shareholder and his or her spouse and dependents, and is reported as an adjustment to income.
Purchasers of either hybrid or other alternate-fuel vehicles can take the deduction as an adjustment to income and don't have to itemize.
A more satisfying interpretation is that the revision of the original September 11,1997, proposal introduced the setoff aspects of the penalty calculation to ensure consistency between the overall adjustment to income arising from the cumulative effect of applying subsection 247(2) to all of a taxpayer's transactions, and the penalty base (which, in the original version, lacked the same cumulative effect).
On his 1984 return, Gale deducted this amount on Line 27, Form 1040, as an adjustment to income.
Excluding a positive adjustment to income tax estimates and the benefit of the discounted early retirement of an acquisition payable, normalized income from continuing operations was $11.
Teachers who purchase classroom supplies and are not reimbursed may deduct up to $250 as an adjustment to income through tax year 2007.
By way of comparison, approximately 50% of the SE tax is deductible in computing the actual SE tax liability; in addition, 50% of SE tax is deductible as an adjustment to income.
And revenue agents have a nasty habit of deciding whether an improvement is a change in method based on whether it gives rise to a positive or negative adjustment to income, and whether it helps or hurts the taxpayer to go back and fix the problem for prior years.