Adjustments and deductions

REG Chapter 14 · Area IV · Blueprint IV.C

Gross income is only the start. Adjustments take it down to adjusted gross income (AGI), and then either the standard deduction or itemized deductions, OBBBA's new deductions and the qualified business income deduction take it to taxable income. The Blueprint asks you to identify allowed adjustments (retirement plans, health savings accounts, self-employment items), identify itemized deductions (medical, residence interest, casualty losses, taxes), calculate the QBI deduction and review a return's AGI and taxable income. Owen, the Delgados and Rosa's self-employed sister Lena work through every line with Reggie. Figures are for tax year 2026.

In this chapter

From gross income to taxable income
Adjustments for the self-employed, retirement and HSAs
Standard deduction and OBBBA's new deductions
Itemized deductions: medical expenses
Itemized deductions: state and local taxes
Itemized deductions: interest
Itemized deductions: charitable contributions
Itemized deductions: casualty losses, gambling and other items
The qualified business income deduction (§199A)
Reviewing AGI and taxable income

This chapter has 10 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

Adjustments to reach AGI
standard and itemized deductions
OBBBA deductions for tips, overtime, seniors and car loan interest
the QBI deduction

Chapter 13: Items from pass-through entities · Chapter 15: Loss limitations