Deductions from Adjusted Gross Income

Above-the-Line Deductions

(Individual deductions are subject to limits that are dependent on personal circumstances):

• Alimony payments
• Archer Medical Savings Account (MSA) contributions
• Capital-loss deductions
• Educator expenses
• Health Savings Account (HSA) contributions
• IRA contributions
• Medical savings account contributions (offered by some small businesses)
• Moving expenses (Job relocation)
• Net operating losses
• Self-employed health insurance and long-term care policies
• Self-employed qualified retirement plan contributions
• Self-employed Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) contributions
• Self-employed Simplified Employee Pension (SEP) contributions
• Self-employment tax
• Student loan interest
• Tuition and fees

Itemized Deductions

(Individual deductions are subject to limits that are dependent on personal circumstances):

• Casualty and theft losses (unreimbursed)
• Charitable contributions
• cash, property, donated clothing or household items and appreciated long-term assets
• Employee business expenses (unreimbursed)
• Gambling losses
• Health insurance costs and medical expenses (see Form 1040 and 1040A instructions for complete list). Amount is deducted after insurance reimbursements:
  • Alcohol or drug abuse treatment§
  • Annual physical
  • Crutches, canes and orthopedic shoes§
  • Long-term care insurance
  • Medical transportation§
  • Orthodontia
  • Prescription eyeglasses, contact lenses and hearing aids§
• Income tax preparation software and fees*
• Investment expenses*
• Job-search expenses*
• Legal fees to earn income
• Mileage and expenses associated with volunteer work
• Mortgage interest (including interest on equity loans)
• Points paid for a mortgage or refinancing
• Professional investment-advisory fees*
• Taxes - state and local income and personal property
• Unreimbursed employee business expenses*



§ Deductible to the extent the total of all medical and dental expenses exceeds 7.5% of adjusted gross income
* Deductible as miscellaneous itemized deductions to the extent the total exceeds

Information is current as of Monday Dec. 12, 2011

This article was provided by the American Institute of Certified Public Accountants (AICPA).