FAQ on Certen Line Itmes on Tax Return

Q:What is adjusted gross income ?

A: Adjusted Gross income is the total Gross income minus certain deductions like Health Savings, Student Loan Interest, IRA deduction, Sep IRA, Self-employed health insurance, Penalty on Early withdrawal of Savings, Educator Expense etc. You can find the Adjusted Gross income on line number 7 of the 2018 tax return form 1040.

Q:Why the Taxable income is different than adjusted gross income?

A:You can deduct the standard deduction or itemized deduction (depends on your specific tax situation) and the Qualified Business income deduction ( if you have a small Business) from the Adjusted Gross income and tax will be calculated from the Taxable income not from the adjusted gross income.Most of lenders taking the adjusted gross income as income when making lending decisions

Q:What is considered as Qualifying Medical Expenses?

A:Qualifying Medical Expenses include most medical and dental costs that they paid for themselves, their spouses and their dependents including:The costs of diagnosing, treating, easing or preventing disease.The costs paid for prescription drugs and insulin.The costs paid for insurance premiums for policies that cover medical care and Some long-term care insurance costs.

Q: What is Qualified business income (QBI) deduction?

A: This is a new deduction started with 2018 tax return and many of the Self- employed people like sole proprietorship (Schedule C) Partner Ship (1065) and Small Corporation ( 1120S) may  deduct  20 Percent if their qualified business income from the adjusted gross income. Exceptions apply and visit IRS for more information or talk to one of our tax professional.