Alabama Adjustments to Income
Alabama offers several adjustments to income such as:
- Payments Made to Alabama PACT or College Education Savings Plan - Beginning January 1, 2008 you can deduct up to $5,000 ($10,000 if filing joint) per year for payments made to the Alabama Prepaid Affordable Tuition Program (PACT) or the Alabama College Education Savings Program.
- Health Insurance Deduction for Certain Employer Provided Plans - Alabama resident taxpayers may deduct from their Alabama gross income 100% of the amounts that they pay as health insurance premiums as part of an employer provided health insurance plan who are employed by an employer that has less than 25 employees and earns no more than $50,000.00 of wages and reports no more than $75,000.00 of adjusted gross income on their Alabama individual income tax return ($150,000.00 if Married Filing Joint).
- Costs to Retrofit/Upgrade Home to Resist Wind/Flood Damage - Alabama residents may deduct from gross income the lesser of 50% of the cost or $3,000.00 to retrofit or upgrade their home to resist wind or flood damage. The taxpayer must have a certification as prescribed under Chapter 31D, Title 27, Code of Alabama 1975 or the Alabama Residential and Energy Codes Board.
- Taxable Portion of Pensions to Alabama - If the pension distribution is fully taxable, report the entire amount within your Alabama return. If only part of the distribution is taxable, enter the "taxable amount". You may need to complete the worksheet to determine the taxable amount (found on Page 13 of the Form 40 Instruction Booklet).
- Moving Expenses - Employees and self-employed persons (including partners) may deduct certain moving expenses as an adjustment to gross income to the same extent and subject to the same limitations as currently allowed under federal rules with the following exception: The new job location must be within the State of Alabama.
- This deduction may be taken if you moved in connection with your job or business and your new workplace in Alabama is at least fifty (50) miles farther from your old residence than your old workplace was from your former residence. If you had no former workplace, your new workplace must be at least fifty (50) miles from your old residence.
- Only expenses incurred in the moving of household goods and personal effects from the former residence to the new residence and traveling expenses, including lodging while en route to the new location are deductible.
- Expenses which are no longer deductible include the cost of meals while en route to the new location, pre-move house hunting trips, temporary living expenses, closing costs of selling the old house, costs of purchasing a new house, and costs incurred in settling an unexpired lease.
- Alimony Payments - You can deduct payments of alimony or separate maintenance made under a court decree to the same extent allowed for federal income tax purposes. DO NOT deduct lump-sum cash or property settlements, voluntary payments not made under a court order or a written separation agreement, or amounts specified as child support. The name, social security number, and address of the person receiving the payments must be shown within your Alabama income tax return.
To locate "Adjustments to Income" within your Alabama state return, log into your TaxSlayer account and click State Section located on the black navigation bar at the top of the Welcome Back screen. Next, click on Edit>>>Enter Myself>>>Adjustments to Income.