While you read my response, please open the Form 1040 and follow along with me. It will help you understand the concept, if you can view how a tax return flows.
AGI is on line 37.
The deductions to arrive at AGI are lines 23-35. These are also called “above the line” deductions.
Consider the “line” to be the very end of 1040, page 1.
“Below the line” deductions are all of the deductions located on Schedule A. View 1040, line 40. On line 40, you can use the standard deduction amount OR Schedule A. If you use Schedule A, it's called itemizing deductions. Itemized deductions are also called deductions from AGI, because it's subtracted from the AGI on line 37.
EVERYONE can take above the line deductions. Taxpayers can only take below the line deductions if they itemize. For most people, their itemized deductions do not exceed their standard deduction, so in those cases it's more beneficial to use the standard deduction.
To learn what is considered above the line or below the line, review 1040, lines 23-35 and Schedule A.
I hope this helps.
Link to 1040:
https://www.irs.gov/pub/irs-pdf/f1040.pdf
Link to Schedule A:
https://www.irs.gov/pub/irs-pdf/f1040sa.pdf
Motivated by JC. I do it to make God proud.
FAR: 91 July 2015
AUD: 83 October 2015
REG: 81 January 2016
BEC: 83 February 2016
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