Above-the-Line Tax Deductions Anyone Can Take

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Above-the-Line Tax Deductions Anyone Can Take

If you’re thinking about spending the next few weeks trying to scrounge up tax deductions, you can probably relax. Fewer than 10 percent of all tax filers chose to itemize their deductions in 2020, and the numbers will probably be the same in the 2023 tax year.

The big drop in itemized returns can be attributed to the Tax Cuts and Jobs Act of 2017, which raised the standard deduction dramatically starting in tax year 2018. In the 2023 tax year, individuals can claim a $13,850 standard deduction, and married couples can claim $27,700. Those who file as head of household can claim $20,800. For each taxpayer 65 or older or blind, the standard deduction goes up $1,500 ($1,850 for single filers and heads of households).

For most retirees and preretirees, the fat standard deduction means skipping the hunt for juicy itemized deductions and moving on to figuring out how much tax you owe. But there are a handful of deductions that you may be able to claim even if you don’t itemize. They’re called above-the-line deductions, and they can be your friends at tax time.

Drawing the line
What’s “the line”? That would be line 11 on IRS Form 1040 and 1040-SR, which is where you put your adjusted gross income (AGI). The first line below that, line 12, is where you would put your itemized deductions from Schedule A.
If you are eligible for above-the-line deductions, you can deduct them before you calculate your adjusted gross income, no matter how small those deductions are. Many people have at least one above-the-line deduction that fits them. Many of these above-the-line deductions are calculated using the Schedule 1 worksheet — Additional Income and Adjustments to Income — included in the 1040 instructions and reported on line 10 of your tax return, one line above your adjusted gross income.
1. Alimony Paid 2. Early Withdrawal Penalties, 3. Health Savings Account (HSA), 4. Individual Retirement Accounts, 5. Military Moving Expenses, 6. Self-Employment Expenses, 7. Teacher Expenses, 8. Student Loan Interest Payments.  Just to name a few.