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Above the Line

 
Business Dictionary: Above the Line

In general, amounts on a tax return that are deductible from gross income before arriving at Adjusted Gross Income (AGI) such as IRA contributions, half of the self-employment tax, self-employed health insurance deduction, Keogh retirement plan and self-employed SEP deduction, penalty on early withdrawal of savings, and alimony paid. The term is derived from a solid bold line on Form 1040 and 1040A above the line for adjusted gross income. A taxpayer can take deductions above the line and still claim the standard deduction.

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Business Dictionary. Dictionary of Business Terms. Copyright © 2000 by Barron's Educational Series, Inc. All rights reserved.  Read more