26 U.S.C. Section 62. Adjusted gross income defined
(a) General rule
For purposes of this subtitle, the term ”adjusted gross income”
means, in the case of an individual, gross income minus the
(1) Trade and business deductions
The deductions allowed by this chapter (other than by part VII
of this subchapter) which are attributable to a trade or business
carried on by the taxpayer, if such trade or business does not
consist of the performance of services by the taxpayer as an
(2) Certain trade and business deductions of employees
(A) Reimbursed expenses of employees
The deductions allowed by part VI (section 161 and following)
which consist of expenses paid or incurred by the taxpayer, in
connection with the performance by him of services as an
employee, under a reimbursement or other expense allowance
arrangement with his employer. The fact that the reimbursement
may be provided by a third party shall not be determinative of
whether or not the preceding sentence applies.
(B) Certain expenses of performing artists
The deductions allowed by section 162 which consist of
expenses paid or incurred by a qualified performing artist in
connection with the performances by him of services in the
performing arts as an employee.
(C) Certain expenses of officials
The deductions allowed by section 162 which consist of
expenses paid or incurred with respect to services performed by
an official as an employee of a State or a political
subdivision thereof in a position compensated in whole or in
part on a fee basis.
(3) Losses from sale or exchange of property
The deductions allowed by part VI (sec. 161 and following) as
losses from the sale or exchange of property.
(4) Deductions attributable to rents and royalties
The deductions allowed by part VI (sec. 161 and following), by
section 212 (relating to expenses for production of income), and
by section 611 (relating to depletion) which are attributable to
property held for the production of rents or royalties.
(5) Certain deductions of life tenants and income beneficiaries
In the case of a life tenant of property, or an income
beneficiary of property held in trust, or an heir, legatee, or
devisee of an estate, the deduction for depreciation allowed by
section 167 and the deduction allowed by section 611.
(6) Pension, profit-sharing, and annuity plans of self-employed
In the case of an individual who is an employee within the
meaning of section 401(c)(1), the deduction allowed by section
(7) Retirement savings
The deduction allowed by section 219 (relating to deduction of
certain retirement savings).
((8) Repealed. Pub. L. 104-188, title I, Sec. 1401(b)(4), Aug.
20, 1996, 110 Stat. 1788)
(9) Penalties forfeited because of premature withdrawal of funds
from time savings accounts or deposits
The deductions allowed by section 165 for losses incurred in
any transaction entered into for profit, though not connected
with a trade or business, to the extent that such losses include
amounts forfeited to a bank, mutual savings bank, savings and
loan association, building and loan association, cooperative bank
or homestead association as a penalty for premature withdrawal of
funds from a time savings account, certificate of deposit, or
similar class of deposit.
The deduction allowed by section 215.
(11) Reforestation expenses
The deduction allowed by section 194.
(12) Certain required repayments of supplemental unemployment
The deduction allowed by section 165 for the repayment to a
trust described in paragraph (9) or (17) of section 501(c) of
supplemental unemployment compensation benefits received from
such trust if such repayment is required because of the receipt
of trade readjustment allowances under section 231 or 232 of the
Trade Act of 1974 (19 U.S.C. 2291 and 2292).
(13) Jury duty pay remitted to employer
Any deduction allowable under this chapter by reason of an
individual remitting any portion of any jury pay to such
individual’s employer in exchange for payment by the employer of
compensation for the period such individual was performing jury
duty. For purposes of the preceding sentence, the term ”jury
pay” means any payment received by the individual for the
discharge of jury duty.
(14) Deduction for clean-fuel vehicles and certain refueling
The deduction allowed by section 179A.
(15) Moving expenses
The deduction allowed by section 217.
(16) Archer MSAs
The deduction allowed by section 220.
(17) Interest on education loans
The deduction allowed by section 221.
(18) Higher education expenses
The deduction allowed by section 222.
Nothing in this section shall permit the same item to be deducted
more than once.
(b) Qualified performing artist
(1) In general
For purposes of subsection (a)(2)(B), the term ”qualified
performing artist” means, with respect to any taxable year, any
individual if –
(A) such individual performed services in the performing arts
as an employee during the taxable year for at least 2
(B) the aggregate amount allowable as a deduction under
section 162 in connection with the performance of such services
exceeds 10 percent of such individual’s gross income
attributable to the performance of such services, and
(C) the adjusted gross income of such individual for the
taxable year (determined without regard to subsection
(a)(2)(B)) does not exceed $16,000.
(2) Nominal employer not taken into account
An individual shall not be treated as performing services in
the performing arts as an employee for any employer during any
taxable year unless the amount received by such individual from
such employer for the performance of such services during the
taxable year equals or exceeds $200.
(3) Special rules for married couples
(A) In general
Except in the case of a husband and wife who lived apart at
all times during the taxable year, if the taxpayer is married
at the close of the taxable year, subsection (a)(2)(B) shall
apply only if the taxpayer and his spouse file a joint return
for the taxable year.
(B) Application of paragraph (1)
In the case of a joint return –
(i) paragraph (1) (other than subparagraph (C) thereof)
shall be applied separately with respect to each spouse, but
(ii) paragraph (1)(C) shall be applied with respect to
their combined adjusted gross income.
(C) Determination of marital status
For purposes of this subsection, marital status shall be
determined under section 7703(a).
(D) Joint return
For purposes of this subsection, the term ”joint return”
means the joint return of a husband and wife made under section
(c) Certain arrangements not treated as reimbursement arrangements
For purposes of subsection (a)(2)(A), an arrangement shall in no
event be treated as a reimbursement or other expense allowance
arrangement if –
(1) such arrangement does not require the employee to
substantiate the expenses covered by the arrangement to the
person providing the reimbursement, or
(2) such arrangement provides the employee the right to retain
any amount in excess of the substantiated expenses covered under
The substantiation requirements of the preceding sentence shall not
apply to any expense to the extent that substantiation is not
required under section 274(d) for such expense by reason of the
regulations prescribed under the 2nd sentence thereof.