Tax Tip {Part 3}

Adjusted Gross Income

Line 23 – If you are a teacher, you are able to deduct some of the money yo spent on supplies.  You can deduct up to $250 of qualified expenses.

Line 24 – Business expenses for reservists, performing artists, and fee-based government officials would be deducted here.

Line 25 – If you have a Health savings account, you can enter your deduction here.

Line 26 – Moving expenses are entered here.  This would be if you moved for your job, there are stipulations for this deduction.  Your new workplace must be at least 50 miles farther from your old home than your old home was from your old workplace. If you had no former workplace, your new workplace must be at least 50 miles from your old home.

Line 27 – If you are self-employed, you are able to deduct one-half of your self-employment tax here.

Line 28 – Deduct your Self-employed SEP, SIMPLE, and qualified plans here.

Line 29 – Deduct your self-employed health insurance here.

Line 30 – Enter your penalty on early withdrawal of savings here.  1099-INT or 1099-OID will show this penalty amount.

Line 31 – If you paid alimony, enter the amount you paid and the social security number to the person paid.

Line 32 – Enter your IRA deduction here.  If you made contributions to a tradi- tional IRA for 2009, you may be able to take an IRA deduction. But you, or your spouse if filing a joint return, must have had earned income to do so.

Line 33 – If you paid on student loans, you are able to deduct the amount of interest you paid for the year.  You can take this deduction only if all of the following apply.

• You paid interest in 2009 on a qualified student loan (see below).
• Your filing status is any status except married filing separately.
• Your modified adjusted gross income (AGI) is less than: $75,000 if single, head of household, or qualifying widow(er); $150,000 if married filing jointly. Use lines 2 through 4 of the worksheet below to figure your modified AGI.
• You, or your spouse if filing jointly, are not claimed as a dependent on someone’s (such as your parent’s) 2009 tax return.

Line 34 – If you are/were a student and paid for your education, you may able to deduct some of this amount.

Line 35 – Enter your domestic production activities here.  You may be able to deduct up to 6% of your qualified production activities income from the following activities.

• Construction of real property per- formed in the United States.
• Engineering or architectural services performed in the United States for construction of real property in the United States.
• Any lease, rental, license, sale, ex- change, or other disposition of:
  • Tangible personal property, computer software, and sound recordings that you manufactured, produced, grew, or extracted in whole or in significant part within the United States,
  • Any qualified film you produced, or
  • Electricity, natural gas, or potable water you produced in the United States.

Line 36 – Add up lines 23 through 31a and 32 through 35 and enter the total here.

Line 37 – Subtract line 36 from 22, this is your adjusted gross income (AGI).  See Tax Tip {Part 2} for line # 22 amount, which was $28,650.

All family information in my tax tips are examples and will be for the same family all the way through the tips

That was the easy part, stay tuned for more the remaining sections.  The next tax tip on the 1040 will be Tax & Credits.  I will only be doing the standard deduction in my example but I will go over itemization in another Tax Tip.