Definition
Above-the-line deductions are adjustments subtracted from gross income to arrive at AGI, available whether or not you itemize.
How It Works
They include items such as deductible retirement contributions, HSA contributions, the deductible portion of self-employment tax, and certain others. Because they reduce AGI, they can also improve eligibility for benefits tied to AGI or MAGI.
Example
Contributing to a SEP-IRA reduces AGI above the line, which can also lower exposure to the Net Investment Income Tax.
When It Works Best
They are especially valuable because they reduce AGI, which influences many other thresholds.
Who It Applies To
Taxpayers with qualifying adjustments.
Watch-Outs
These are among the most powerful levers for high earners because they reduce the AGI figure that governs so many other rules.
