Rick, a single individual with a salary of $45,000 incurred and paid the following expenses during the year: Student loan interest $800; Medical expenses $5,000; Alimony $11,000; Mortgage interest on personal residence $3,000; State income taxes $4,000; Moving expenses $1,500; Contribution to a traditional IRA $2,000...which expenses are deductible for AGI and why?
Rick may deduct the following as "adjustments to income" which are deducted on page 1 of the 1040, and lower the AGI:
Student loan interest = $800 (800 is less than maximum, and his income is under the phaseout)
Alimony paid of $11000
Moving expenses, assuming all deductible = $1500
Contribution to traditional IRA = $2000 (his income is under phaseout for deduction even if he has retirement plan at work)
So his AGI is 45,000 - 15,300 = $29700
The other expenses are "itemized deductions which are deducted after AGI is determined.
10+ years tax preparation and tax advice.