Definition:
This represents all of your taxable income minus specific adjustments, and is central for establishing whether you are qualified to receive and/or continue to receive certain tax benefits that are determined via income levels. This is the amount from which personal and dependent exemptions and other deductions are made so as to arrive at the amount which will be taxed. These above-the-line deductions, claimed whether you itemize your deductions or not, include eligible contributions to IRAs, Keogh and SIMPLE plans, work-related moving expenses, penalties paid due to early withdrawal of savings, a 50% deduction of the self-employment tax, any alimony payments, and up to $2500 paid for interest on student loans.
