HopefullyInLawSchool
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Simple English definitions for legal terms
below-the-line
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A quick definition of below-the-line:
Below-the-line refers to deductions that are taken after calculating adjusted gross income but before calculating taxable income. These deductions include expenses such as medical payments and local taxes. This is different from above-the-line deductions which are taken before calculating adjusted gross income.
A more thorough explanation:
Definition: Below-the-line refers to deductions that are taken after calculating adjusted gross income and before calculating taxable income. These deductions are subtracted from your income to reduce the amount of taxes you owe.
Examples: Some examples of below-the-line deductions include medical expenses, local taxes, and charitable contributions. For instance, if you paid $5,000 in medical bills during the year and your adjusted gross income is $50,000, you can deduct the $5,000 from your income to arrive at your taxable income of $45,000. This means you will owe less in taxes.
Explanation: Below-the-line deductions are subtracted from your income after you have calculated your adjusted gross income. This means that they are taken into account after you have already deducted certain expenses such as retirement contributions and health insurance premiums. These deductions can help reduce your taxable income and lower the amount of taxes you owe to the government.