What are ‘above-the-line deductions,’ and why are they valuable?

 In Estate Planning, Government Benefits, Tax Law

Before we get into above-the-line deductions, let us start with some helpful definitions:

Deduction: another way of saying ‘subtract.’ In the context of a federal tax return, a deduction is an expense you subtract from your gross income to determine your taxable income.

Itemized Deduction: the amount of money you spent on deductible expenses, for example: medical costs, state and local taxes, mortgage interest, and charitable expenses.

Gross income: the sum of all wages, dividends, capital gains, business income, retirement distributions, or other types of income.

Adjusted gross income (“AGI”): Your taxable income. (Gross income minus deductions)

An “above the line” deduction is a method by which you can reduce your taxable income. This type of deduction is subtracted from your gross income before determining your AGI.


You claim above-the-line deductions in Part II of Schedule I, some of which include:

  • HSA Contributions.
  • Moving expenses for members of the Armed Forces.
  • The deductible part of self-employment tax.
  • Contributions to self-employed SEP, SIMPLE, and qualified retirement plans.
  • Health insurance premiums for self-employed individuals.
  • Penalties associated with early withdrawals of savings.
  • Alimony payments (from divorce agreements before Dec. 31, 2018).
  • Traditional IRA contributions.
  • Contributions to an Archer medical savings account.

More details and rules for claiming above-the-line deductions may be found in the Form 1040 Instructions.


At Bach, Jacobs and Byrne, P.A., we address tax issues as part of your estate planning, probate, and trust administration. If you live in Sarasota, Manatee, or Charlotte County, contact Bach, Jacobs and Byrne, P.A. at (941) 906-1231 to evaluate whether your estate plan is tax efficient.

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