adjustments 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.

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adjustments to income

Any of various amounts a taxpayer is allowed to subtract from his or her gross income when calculating adjusted gross income. These adjustments are permitted even if the taxpayer does not itemize deductions during a tax year. Allowable adjustments of particular interest to investors are interest penalties on early savings withdrawals and payments into IRAs and Keogh plans. See also adjusted gross income.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.