Adjustments to Income

The above image is theTY2021 Schedule 1 Part II--Adjustments to income. Here is where values for payments of student loan interest, alimony (for divorces in effect 2018 and prior), educator classroom expenses, and individual self made contributions to IRA get entered. These are called adjustments because they REDUCE (aka "adjust") the clients taxable income thereby reducing their income tax liability.
I like to think of adjustments as coupons because just like a coupon, adjustments reduce the total before the tax is calculated. :) Below I have included a worksheet I made a few years ago to try and explain how adjustments, non-refundable credits, and refundable credits affect a tax return.

Educator Expenses- PUB 4012 around page E-4 goes over qualifications
For TY2022--Qualified educators can claim up to $300 in qualified expenses as an adjustment ($600 if both spouses are qualified teachers). Each spouse can claim up to $300.

Qualified educators: Must be K-12 teacher, counselor, principal, or aide who worked in a school for at least 900 hours during a school year.
Qualifying expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), PPE (hand sanitizer/masks/wipes) and other materials used in the classroom. Additionally, professional development expenses are allowed unless reimbursement is offered by the school but not accepted

Note: most teachers receive a small stipend--make sure to ask that the amount claiming was un-reimbursed andnot covered by the school stipend.

Alimony Paid-- If client pays alimony, and they were divorced:

AFTER January 1, 2019 then there is nothing to enter--they get no adjustment as the new law states the receiving spouse no longer has to claim the income.
BEFORE January 1, 2019 then enter the amount of alimony paid, the receiving spouses social security number and name, and date of divorce. The payer (your client) gets an adjustment to reduce the tax on that amount of money and the receiver (ex-spouse) has to claim it as taxable income.

IRA Deduction - If client notates on intake form they made contributions to a retirement account, ask them if it was through work or if they made it on their own. (Ex: they wrote a check from their checking account and deposited it in an IRA they opened at a local bank).

If they indicated they paid the money directly themselves (this would be with post-tax dollars--money that has already been taxed when earned) we can enter the amount under IRA deduction
This is for when money is put into a Traditional IRA **if put into a Roth IRS--See Form 8880 instead.

HSA certification has been merged into the Advanced test, and every year I get asked about HSA so I have kept this training here for everyone to view.

What is it--how to enter it

HSA INFO

Click Here to Go Back to Training Checklist

Below is more resources on this topic:

My attempt at explaining how adjustments, non-refundable and refundable credits affect a tax return by comparing them to things we may be more familiar with-- buying stuff! Click either image to open PDF. (a little corny I know)

More Resources:

From IRS PUB 4491 covers tax Law for the VITA/TCE volunteer

Link & Learn interactive training modules for Adjustments to Income -updated mid-November usually-- -click image on right

(available as a PDF) updated generally by mid October-click link

Topics like this one are pretty much the same year after year and can be reviewed anytime.

Below is more information provided by Prosperity Now's VITA-Train (Module 4). Enjoy!

Click Here to Go Back to Training Checklist