Question

Which best describes the difference between itemized tax deductions and adjustments to income?

1) Itemized tax deductions reduce your total taxable income, while adjustments to income are tax credits that directly reduce your tax liability.
2) Itemized tax deductions are for specific expenses such as mortgage interest and medical expenses, while adjustments to income are changes made to your gross income before calculating your taxable income.
3) Itemized tax deductions are only available to businesses, while adjustments to income are for individuals only.
4) Itemized tax deductions are the same as adjustments to income, and the terms can be used interchangeably.

Answer 1

Itemized tax deductions are specific expenses that reduce total taxable income, while adjustments to income are changes made to gross income before calculating taxable income.

Step-by-step explanation:

The difference between itemized tax deductions and adjustments to income are as follows:

1. Itemized tax deductions are specific expenses such as mortgage interest and medical expenses, and they reduce your total taxable income. On the other hand, adjustments to income are changes made to your gross income before calculating your taxable income. They can include deductions for contributions to retirement accounts or student loan interest.