1.9 Above the Line Deductions (Adjustments)

1. Alimony paid (before 12/31/2018)

2. Retirement plan contribution

(1) Traditional (regular/deductible) IRA

a) Contribution: deductible
b) Tax-free accumulation of earnings (deferred)
c) Withdrawals (distributions): taxable
d) Amount of deduction (deduction limit) - $6,000 (2019) or earned income (compensation)
e) Earned income (compensation) defined - salary, wages, commissions

f) Deductibility requirements
(i) Full deductions: not participants in an employer retirement plan or AGI is less than $64,000 (2019)
(ii) Partial deductions: AGI is less than $74,000 (2019)
(iii) A spouse is not a participant and MFJ AGI is less than $193,000 (2019): full deductions

g) Premature (early) distribution (before age of 591/2) - 10% penalty tax
  1. Home purchase (1st time)
  2. Insurance (medical)
  3. Medical expense in excess of 7.5% of AGI
  4. Disability
  5. Education
  6. Death

* Excess contribution: 6% penalty (under age 59.5)
* Excess accumulation: 50% penalty (over age 70.5)

h) Additional catch-up contribution (age 50 or over): $1,000

(2) Roth IRA

a) Contribution: nondeductible
b) Tax-free accumulation of earnings
c) Withdrawals (distributions): tax-free
d) Contribution limits: $6,000 (2019)
e) Phase-out income limits: AGI is less than $122,000 (2019)
f) Qualified nontaxable distributions of Roth IRA: least five years
g) Rollovers from traditional (deductible) IRAs to Roth IRAs

(3) Nondeductible IRA

a) Contribution: nondeductible
b) Tax-free accumulation of earnings (deferred)
c) Withdrawals (distributions): previously accumulated untaxed earnings - taxable

(4) Education IRA (Coverdell Education Saving Accounts: CESAs)

a) Contribution: nondeductible
b) Tax-free accumulation of earnings
c) Withdrawals (distributions): tax-free (before the beneficiary reaches 30)
d) Contribution requirements - under 18,  $2,000 per child (2019), AGI is less than $95,000 (2019)

(5) Keogh (profit sharing) plans

Deductible $56,000 (2019), $57,000 (2020) or 25% of net self-employment earnings for Keogh

Other

*SEP (Simplified employee pension) plan
*SIMPLE (Savings incentive match plans for employees) plan

	Traditional IRA	Roth IRA	Education IRA (Coverdell ESAs)
Contribution	Deductible	Nondeductible	Nondeductible
Distribution	Taxable	Tax-free	Tax-free**
Limit (2019)	$6,000	$6,000	$2,000/child
AGI limit for full contribution (2019)	$64,000 (Single) $103,000 (MFJ)*	$122,000 (Single) $193,000 (MFJ)	$95,000 (Single) $190,000 (MFJ)

3. Penalty on early withdrawal of savings

4. Self-employed health insurance

 - 100% deductible

5. Self-employed taxes

 - 50% deductible

6. Education (student) loan interest expense

 - $2,500 (2019)

7. Educator expense

 - $250 (2019) per year each taxpayer

8. Moving expense

9. Health (medical) savings account contribution

10. Jury duty pay remitted to an individual's employer

11. Attorney fees paid in certain discrimination cases

* Higher Education Deduction

Tuition and fees deduction - $4,000