Above-the-Line Deduction

What Is an Above-the-Line Deduction?

An above-the-line deduction is an item that is subtracted from gross income in order to calculate adjusted gross income on the IRS Form 1040. The IRS Form 1040 is used by individual U.S. taxpayers and households to calculate and file their yearly taxes.

The total amount of above-the-line deductions is reported on line 10c of the Form 1040 and includes items listed on the Form 1040, or, if applicable, Schedule 1, such as educator expenses, health savings account deduction, deductible self-employment taxes, deductive contributions to retirement accounts, student loan interest, tuition and fees, and others.

The above-the-line deductions are separate items from the itemized deductions provided on the Form 1040 schedule A, and are also different from the standard deduction that can be claimed on line 40 of the IRS Form 1040.

Understanding the Above-the-Line Deduction

Above-the-line deductions are subtracted from gross income in order to reach adjusted gross income. Gross income is calculated by adding up an individual or household's sources of income throughout the year as documented on W-2s, as well as 1099s, dividends, capital gains, unemployment income, retirement account distributions, Social Security income, or other forms of monetary income or compensation. Next, above-the-line deductions are tallied and subtracted from gross income in order to reach adjusted gross income. From adjusted gross income, itemized deductions or the standard deduction are taken in order to arrive at the taxable income figure. This ending taxable income figure is the number that determines the amount of tax an individual or household pays for the year, not the gross income or adjusted gross income.

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  2. Internal Revenue Service. "Form 1040: U.S. Individual Income Tax Return," Pages 1-2. Accessed

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  5. Internal Revenue Service. "Adjusted Gross Income." Access Feb. 25, 2020.