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Tax Glossary: Above-the-line deductions

Posted by McDonald & Osborne Posted on Oct 13 2015

Above-the-line deductions : Certain expenses can be deducted to reduce taxable income even if you don’t itemize deductions . These money-saving write-offs include: deductible contributions to traditional IRAs (individual retirement accounts), SIMPLE and Keogh plans, contributions to HSAs (health savings accounts), job-related moving expenses, any penalty paid on early withdrawal of savings, the deduction for 50% of the self-employment tax paid by self-employed taxpayers, alimony payments, up to $2,500 of interest on higher education loans and certain qualifying college costs, the $250 teacher deduction, any jury duty pay forfeited to your employer and qualifying travel expenses for members of the Reserves and National Guard. They are called above-the-line deductions because they are subtracted before arriving at adjusted gross income. Exemptions and itemized deductions are subtracted from AGI to arrive at taxable income.