Tax Talk: Above-the-Line Deductions Explained

Welcome back to the Dollar Wise Podcast. In this episode, Andrew Barnhardt and Brett Herron of HFM Advisors dive into the world of above-the-line tax deductions. These often-overlooked deductions can reduce your adjusted gross income and improve your eligibility for other tax benefits. From retirement contributions and HSAs to student loan interest and self-employment tax breaks, Andrew and Brett break down how these deductions work, why they matter, and how to take advantage of them. Whether you’re planning for next April or the next decade, this episode offers a practical look at reducing your tax bill.

Tune into this episode to also learn:

• Why above-the-line deductions matter for your tax planning strategy.
• How HSAs and retirement plans offer triple tax advantages.
• The difference between above-the-line and below-the-line deductions.
• Lesser-known deductions like student loan interest and self-employment tax offsets.

What we discussed

• [00:01:00] Why tax planning is a year-round activity and the role of above-the-line deductions.
• [00:03:04] Key differences between above-the-line and below-the-line deductions.
• [00:05:34] How retirement contributions reduce your taxable income.
• [00:06:30] The triple tax advantage of Health Savings Accounts (HSAs).
• [00:08:20] Student loan interest deduction and its phase-out thresholds.
• [00:09:37] Self-employment tax deductions and how they encourage small businesses.
• [00:11:08] Humorous examples of niche deductions: Olympic medals, timberland, IRS tip-offs.
• [00:13:15] Why adjusted gross income is the “halftime” point of your tax return.
• [00:14:22] Tease for upcoming episode on below-the-line deductions.

3 Things To Remember

1. Above-the-line deductions reduce your adjusted gross income and can unlock other tax benefits.
2. Common deductions include contributions to retirement accounts, HSAs, and student loan interest.
3. Understanding and using these deductions can significantly lower your tax liability year after year.

Memorable moments:

(00:06:38) “HSAs are probably the best investment accounts out there because you have the potential for a triple tax advantage.”

(00:11:08) “If you’re looking for other tax savings, those are three other options for you to have — winning an Olympic medal, planting a forest, and helping the IRS catch people committing tax evasion.”

(00:13:15) “Think about your tax situation like a football game — above-the-line deductions are the first half, adjusted gross income is halftime, and then come the below-the-line deductions.”

Useful Links

Connect with Andrew Barnhardt: LinkedIn

Connect with Brett Herron: LinkedIn

Like what you’ve heard…

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• Schedule time to speak with us HERE
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HFM Investment Advisors, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. All investments involve risk and are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as a recommendation appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.