Adjustments to income are a group of specific deductions that cut your tax by cutting your taxable income. This figure is important for two reasons. First, your personal exemptions and itemized deductions phase out as your adjusted gross income reaches certain levels. Second, many itemized deductions, such as medical expenses are allowed only to the extent they exceed certain percentages of adjusted gross income. Next, subtract deductions and personal exemptions to determine taxable income.
Standard deductions are high enough that less than one out of three taxpayers itemize deductions.
There's no magic to using them other than knowing what's out there. This book gives you the most complete, user-friendly list of deductions available. Personal exemptions are deductions you get for yourself, your spouse, and each dependent. A dependent is someone who gets more than half of their support from you, and meets certain other tests. You ll need to provide a Social Security number for each dependent you claim.