Understanding Adjustments to Income
What Are Adjustments?
Adjustments to income, sometimes called 'above-the-line deductions,' reduce gross income before adjusted gross income (AGI) is calculated. Many adjustments are available regardless of whether the taxpayer claims the standard deduction or itemizes deductions.
- Applied before AGI is determined.
- Available even if the standard deduction is claimed.
- May increase eligibility for other tax benefits tied to AGI.
Tip
Always calculate eligible adjustments before determining deductions or many tax credits.
Summary
Adjustments reduce income early in the tax calculation process and often affect many later tax computations.