Chapter 3
Adjustments to Income

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 this publication.
• Contributions to your Archer medical savings account (MSA) (Form 1040, line 25), if you are an employee of a small business (less than 50 employees), or if you are self-employed and covered only by a high deductible health plan. See Publication 969, Medical Savings Accounts (MSAs), for more information.
• Certain moving expenses (Form 1040, line 26) if you changed job locations or started a new job in 2001. 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 2001 from an S corporation in which you were a more than 2% shareholder. For more details get Publication 535, Business Expenses.
• 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, Retirement Plans for Small Business.
• Penalties paid on early withdrawal of savings (Form 1040, line 30). Form 1099-INT, Interest Income, or Form 1099-OID, Original Issue Discount will show the amount of any penalty you were charged.
• Alimony payments (Form 1040, line 31a). For more information, see Publication 504, Divorced or Separated Individuals.

There are other items you can claim as adjustments to income. These adjustments are discussed in the Form 1040 instructions.

• Individual Retirement Arrangement (IRA) Contributions and Deductions

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