You may be able to subtract amounts from your gross income (Form
1040, line 22 or Form 1040A, line 15) to get your adjusted gross
income (Form 1040, line 33 or Form 1040A, line 19). Some adjustments
to income follow.
- Contributions to your individual retirement arrangement
(IRA) (Form 1040, line 23, or Form 1040A, line 16), explained later in
- Certain moving expenses (Form 1040, line 26) if you changed
job locations or started a new job in 2000. See Publication 521,
Moving Expenses, or get Form 3903, Moving Expenses,
and its instructions.
- Some health insurance costs (Form 1040, line 28) if you were
self-employed and had a net profit for the year, or if you received
wages in 2000 from an S corporation in which you were a more than 2%
shareholder. For more details get Publication 535,
- Payments to your self-employed SEP, SIMPLE, or qualified
plan (Form 1040, line 29). For more information, including limits on
how much you can deduct, see Publication 560,
for Small Business.
- Penalties paid on early withdrawal of savings. See the
instructions for line 30 in your Form 1040 instructions.
- Alimony payments (Form 1040, line 31a). For more
information, see Publication 504,
Divorced or Separated
There are other items you can claim as adjustments to income. These
adjustments are discussed in the Form 1040 instructions.
Individual Retirement Arrangement (IRA) Deduction
This section explains the tax treatment of amounts you pay into
traditional IRAs. A traditional IRA is any IRA that is not a Roth,
SIMPLE, or education IRA. For more detailed information, get
An IRA is a personal savings plan that offers you tax advantages to
set aside money for your retirement. Two advantages of a traditional
- You may be able to deduct some or all of your contributions
to it, depending on your circumstances, and
- Generally, amounts in your IRA, including earnings and
gains, are not taxed until distributed.
Although interest earned from your traditional IRA is generally not
taxed in the year earned, it is not tax-exempt interest. Do not report
this interest on your tax return as tax-exempt interest.
The most that can be contributed for any year to your traditional
IRA is the smaller of the following amounts:
- Your compensation that you must include in income for the
Contributions to spousal IRAs.
In the case of a married couple filing a joint return, up to $2,000
can be contributed to IRAs (other than SIMPLE or education IRAs) on
behalf of each spouse, even if one spouse has little or no
For more information on the general limit and the spousal IRA
limit, see How Much Can Be Contributed? in Publication 590.
Generally, you can deduct the lesser of the contributions to your
traditional IRA for the year or the general limit (or spousal IRA
limit, if applicable) for your IRA. However, if you or your
spouse were covered by an employer retirement plan at any time
during the year for which contributions were made, you may not be able
to deduct all of the contributions. Your deduction may be reduced or
eliminated, depending on your filing status and the amount of your
The difference between your total permitted contributions and your
total deductible contributions, if any, is your nondeductible
contribution. You must file Form 8606, Nondeductible
IRAs, to report nondeductible contributions even if you do not
have to file a tax return for the year.
Regardless of your age, you may be able to establish and contribute
to a Roth IRA. You cannot claim a deduction for any contributions to a
Roth IRA. But, if you satisfy the requirements, all earnings are tax
free and neither your nondeductible contributions nor any earnings on
them are taxable when you withdraw them.
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