Loading
Tap on the profile icon to edit
your financial details.

What Are Above-the-Line Deductions?

If you’re planning on using a tax break to minimize your tax bite, keep in mind that deductions come in different shapes and sizes. There’s the standard deduction that any taxpayer can claim every tax year just for filing taxes. And there are itemized deductions that you can write off instead of taking the standard deduction. There are also above-the-line deductions. Here’s everything you need to know about above-the-line deductions, including how they work and who can take advantage of them.

Estimate your income tax return with our free calculator.

Above-the-Line Deductions: The Basics

All tax deductions reduce your taxable income to some degree. An above-the-line deduction is a tax break that lowers the amount of tax you have to pay by chipping away at your gross income. Also known as adjustments to income, these deductions remove certain expenses from your gross income so that you’re left with your adjusted gross income.

The best thing about above-the-line deductions is that you can claim these tax breaks without itemizing your deductions. Even if you’re taking the standard deduction, you can still use adjustments to income to shrink your tax bill.

How to Claim Above-the-Line Deductions

What Are Above-the-Line Deductions?

In order to claim an above-the-line deduction, you simply need to complete your tax return. Above-the-line deductions are easy to spot. You can find them above the line where you’re required to enter your adjusted gross income.

If you’re filing a standard tax return (Form 1040), there are 13 above-the-line deductions listed on the form that you may be eligible for (in tax year 2016). If you’re filing a 1040A, there are four above-the-line deductions that you may be able to claim. Unfortunately, if you’re filing any other kind of tax return – such as a 1040EZ – you won’t be able to claim these extra tax breaks at all.

While claiming above-the-line deductions is fairly straightforward, you may need to attach other tax forms in order to get credit for them. For example, in order to get a deduction for contributing to a health savings account (HSA), you’ll need to complete Form 8889 and attach it when you file your taxes.

Common Above-the-Line Deductions 

Above-the-line deductions that you can take regardless of whether you’re filing Form 1040 or 1040A are the ones for educator expenses, contributing to an IRA and paying student loan interest. In order to claim the latter two deductions, you may need to look at the instructions for Form 1040A and complete the worksheets provided.

If you’re filing Form 1040, you may be able to benefit from additional tax breaks, including the deductions for moving expenses, paying alimony and paying the self-employment tax. While unreimbursed business expenses for most tax filers must be claimed on the Schedule A tax form (when you itemize your deductions), they may be claimed as above-the-line deductions for certain workers. For example, you may qualify for an adjustment to income for your business expenses if you’re a fee-based public official or a performing artist.

Final Word

What Are Above-the-Line Deductions?

Claiming as many above-the-line deductions as you can is an easy way to cut your tax bill. Just keep in mind that certain deductions are phased out for wealthy tax filers or unavailable to married couples who file separately. That’s why it’s best to review the rules for taking tax breaks before deducting anything on your tax return.

Photo credit: ©iStock.com/asiseeit, ©iStock.com/svetikd, ©iStock.com/twinsterphoto

Amanda Dixon Amanda Dixon is a personal finance writer and editor with an expertise in taxes and banking. She studied journalism and sociology at the University of Georgia. Her work has been featured in Business Insider, AOL, Bankrate, The Huffington Post, Fox Business News, Mashable and CBS News. Born and raised in metro Atlanta, Amanda currently lives in Brooklyn.
Was this content helpful?
Thanks for your input!

Ask Our Taxes Expert

Have a question? Ask our Taxes expert.

Have questions? Email Send your question to jmansfield@smartasset.com

From Our Partner