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One of the basic steps executed with every tax return is determining if there are enough deductions to itemize. The standard deduction is used when total itemized deductions comprise a smaller amount. However, some deductions are really adjustments to income that do not require itemizing.

Teachers, people who moved, divorcees, and individuals repaying student loans are entitled to deduct certain items from taxable income without itemizing. There are about a dozen of these tax-deductible adjustments. In such cases, tax preparer jobs involve taking both the special adjustments to income plus the standard or itemized deductions.

The so-called "above-the-line deductions" reduce Adjusted Gross Income without having to complete the schedule of itemized deductions. However, some of the adjustments require completing an additional tax form. The training from a tax preparation course addresses identification of above-the-line deductions and how to complete any extra tax forms.

The simplest adjustment is educator expenses. These are amounts paid with personal funds by teachers or other school employees for classroom supplies. The maximum amount for this above-the-line deduction is $250. However, there is no additional form to complete and no need to meet the two percent AGI limitation imposed on most unreimbursed employee expenses.

Some other types of workers are entitled to reduce their taxable income by the amount of unreimbursed business expenses. There is no limit by percentage of AGI for business expense deduction by military reservists, performing artists, and fee-basis government officials. Someone with tax preparer certification is a big help in these cases. The taxpayers with deductible out-of-pocket costs for work in these fields must complete Form 2106.

Moving expenses are an above-the-line deduction for anyone relocating to take a new job. Form 3903 is required. Divorcees who pay alimony deduct the payments as an adjustment to income. No extra form is required, but a taxpayer must provide the Social Security number of the ex-spouse.

Study for the tax preparer exam teaches that the deductions for contributions to an IRA or a Health Savings Account are actually adjustments to income. There are limitations on whether the contributions to such accounts are tax-deductible. Separate forms are completed for each type of account. Determination of the tax impact from contributing to an IRA or a Health Savings Account are best left to someone who has completed a tax preparer program.

For the self-employed, above-the-line deductions are available for one-half of the self-employment tax, health insurance premiums for the taxpayer and family, and self-employed retirement plan contributions.

Interest on student loans is an adjustment to income with some limitations. Taxpayers with income above a specified level cannot utilize this above-the-line deduction. Even for those who are entitled to the adjustment, there is a limit of $2,500 per year.

There is also an above-the-line deduction for payments of higher education tuition and fees. This is available to taxpayers with incomes that are too high to qualify for the more advantageous tax credits related to higher education costs.

There are several other potential adjustments to income. Most are uncommon but do affect some taxpayers. Maximizing above-the-line deductions is a valuable reason for any taxpayer incurring special types of expenditures to utilize a the services of a paid tax preparer.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Fast Forward Academy is a leading publisher of education for tax preparer jobs and tax professionals. Access to free questions for the tax preparation course is available on their website.

By Sawyer Adams
Article Source: http://EzineArticles.com/6438432