Above The Line Deduction

AAA

DEFINITION of 'Above The Line Deduction'

Above the line deductions are certain types of deductions that are subtracted from your income before the adjusted gross income is calculated for tax purposes.

INVESTOPEDIA EXPLAINS 'Above The Line Deduction'

Above the line deductions include such items as losses on a property sale, alimony payments and educational expenses. Since above the line deductions are generally deducted from taxable income, they are advantageous to taxpayers in the sense that they reduce the overall tax burden.

RELATED TERMS
  1. Recovery Property

    A specific class of depreciable real estate. Recovery property ...
  2. Educator Expenses Deduction

    An above-the-line deduction for teachers and other education ...
  3. Adjusted Gross Income - AGI

    A measure of income used to determine how much of your income ...
  4. Income Shifting

    A strategy of moving a person's income from a high income bracket ...
  5. Gross Income

    1. An individual's total personal income before taking taxes ...
  6. Taxable Income

    The amount of income that is used to calculate an individual's ...
Related Articles
  1. Taxes

    Tax Treatment Of Roth IRA Distributions

    Learn the requirements for withdrawing funds tax and penalty free.
  2. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  3. Budgeting

    Managing Income During Retirement

    Learn some sensible strategies for making your hard-earned savings last for as long as you need them.
  4. Taxes

    Should You File An Early Tax Return?

    When it comes to filing your taxes, it can often pay to wait until the deadline.
  5. Taxes

    Dividend Tax Rates: What Investors Need To Know

    Find out how legislation enacted in 2003 is benefiting both investors and corporations, and when it's scheduled to expire.
  6. Retirement

    We are in a 401(k) at work. Can we also do a Roth each year? If we can, can it also be deducted from ...

    Participation in a 401(k) or any other employer plan does not affect your ability to establish and/or fund (or participate in) a Roth IRA. Roth IRA contributions are not deductible; therefore, ...
  7. Retirement

    How do I sign up for the saver's tax credit?

    The saver's tax credit is a non-refundable tax credit available to eligible taxpayers in the U.S. who make contributions to their employer-sponsored 401(k), 403(b), SIMPLE, SEP or governmental ...
  8. Taxes

    What is the best method of calculating depreciation for tax reporting purposes?

    Learn the best method for calculating depreciation for tax reporting purposes according to generally accepted accounting principles, or GAAP.
  9. Fundamental Analysis

    Are accounts receivable used when calculating a company's debt collateral?

    Learn how accounts receivables are recorded as assets on a balance sheet; they are used when calculating a company's total debt collateral.
  10. Fundamental Analysis

    Work In Progress (WIP)

    Work in progress, also know as WIP, is an asset on the company balance sheet. WIP is the accumulated costs of unfinished goods that are currently in the manufacturing process.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center