Above the Line vs Below the Line
Lesson:
The line refers to your Adjusted Gross Income (AGI) on a tax return.
Above the line means that it is added before calculating AGI. These numbers are called adjustments to income. They are available to tax all tax payers (whether itemizing or not).
Below the line means that it is added after calculating AGI. These numbers are subtracted from AGI to calculate taxable income. They are only available to those who itemize.
You're an accountant, trying to figure out if a particular federal tax deduction should be applied before or after calculating the adjusted gross income (AGI).
Is the Medical expenses (exceeding 7.5% of AGI) deduction above or below the line?
Answer:
- It is below the line.