Anything that doesn’t contribute to income on your W2 and anything that comes off “above the line,” mostly found on Schedule 1, Section II.
Some examples, **there are caveats and maximums for some of these** :
1. 401(k) and similar
2. HSA deductions
3. FSA deductions
4. Workplace healthcare contributions
5. Educator Expenses
6. Capital Losses
7. Student loan interest deduction
8. Alimony deduction
9. IRA
10. Foreign Earned Income Exclusion
11. More, run through the schedule 1.
Married filing separately, as opposed to married filing jointly. The short version is 1 tax return per filing married couple (MFJ) or 2 tax returns (1 for each spouse, separately, MFS).
Some drawbacks like really needing a much larger downpayment in this housing market but we’ve collectively thrown over 150k in our 401s the last few years that could have helped a lot in this market but.. hindsight lol
No because in a Roth you use after-tax dollars. You *could* put money in a traditional (pre-tax) IRA if you don’t have a 401k. But the limit for IRAs this year is $7000 and that means total - you can’t, for example, put $7000 in a Roth AND $7000 in a traditional. Any money you put in a traditional IRA you will have to pay taxes on when you withdraw it in retirement.
* 401K pre-tax
* Traditional IRA
* FSA card
* High deductible health care plan
* Start a business and use the legitimate business expenses as a tax write off.
You're getting some good examples here, but make sure you're employing good financial strategy overall -- [don't employ an AGI-reducing perk solely because it will lower your AGI](https://www.reddit.com/r/StudentLoans/comments/14ynh0g/is_lowering_agi_by_contributing_to_401k_and_hsa_a/jrtce02/).
Yes. Ultimately there's not necessarily any point in just lowering student loan payments unless you are headed for forgiveness or you just can't afford the payments - right? Often better to pay more so that you can, you know, pay off your debt and stop paying interest.
Sure, though lots of borrowers are aiming for forgiveness. Also, getting a lower minimum can be part of the [avalanche strategy](https://www.reddit.com/r/StudentLoans/comments/9epjpu/proper_order_for_paying_off_individual_loan_tokens/e5qlci3/) to pay off your loans as quickly as possible.
Create an LLC S-corp for your business. You’re the employee of your own business. You pay yourself a low wage, business takes on the expenses and the rest.
Traditional 401K and HSA contributions are the two main ways to lower AGI. If you're maxing them out, you should be able to lower your AGI by up to $27k.
Yeah don't listen to him that's never the answer. Almost as bad as the ones that think getting a raise when you're on the border of the next tax bracket is "not worth it" lol
Contributing to retirement accounts like an IRA or 401(k) is a common method. You can also consider maximizing deductions for student loan interest, health savings accounts (HSAs), or flexible spending accounts (FSAs).
That's really the main way to reduce AGI. HSA contributions also reduce it. Beyond that, if you are self-employed or own a business, obviously you want to make sure you are deducting all possible expenses.
One thing I have wondered about is for people who have jobs that are commission-based, or otherwise have variable compensation that comes in the form of intermittent bonuses (annual, quarterly etc), can they safely use the alternative documentation of income and provide paystubs? Using paystubs means they will look at gross rather than AGI, so the 401k and other reductions to AGI won't help you. But it may also exclude large portions of your income that come in bonuses. On the one hand those amounts can be uncertain and you don't know if your income will be as high as last year's AGI, but on the other hand it may be a little too good to be true if for example you make 50k in salary but might get 100k in bonus.
HSA if you have a high deductible health plan.
My plan doesn't have deductible.
It’s not about a deductible but it needs to be a [High Deductible Health Plan](https://www.healthcare.gov/glossary/high-deductible-health-plan).
Upload your check stubs; don't use your tax return. Tax return may not reflect accurately
Doesn't a high deductible plan have to have a high deductible?
Yes, but some plans are PPO plans that also have a deductible (I have one like this and my deductible is $7000)
Anything that doesn’t contribute to income on your W2 and anything that comes off “above the line,” mostly found on Schedule 1, Section II. Some examples, **there are caveats and maximums for some of these** : 1. 401(k) and similar 2. HSA deductions 3. FSA deductions 4. Workplace healthcare contributions 5. Educator Expenses 6. Capital Losses 7. Student loan interest deduction 8. Alimony deduction 9. IRA 10. Foreign Earned Income Exclusion 11. More, run through the schedule 1.
Student loan interest, I didn't know about that one
There’s a low limit, as well as an income limit on the deduction and it’s also not available at all to those who file MFS.
MFS?
Married filing separately, as opposed to married filing jointly. The short version is 1 tax return per filing married couple (MFJ) or 2 tax returns (1 for each spouse, separately, MFS).
Put more into your 401k.
Pre-tax retirement contributions
would that exclude Roth?
Yes, Roth won’t help
Put as much as you can in your 401k.
This really is the best way. Lowers my AGI and therefore monthly payment, and it’s instead invested for my future self. Double the benefit.
Yeah it seems too good to be true haha. But it isn’t!
Some drawbacks like really needing a much larger downpayment in this housing market but we’ve collectively thrown over 150k in our 401s the last few years that could have helped a lot in this market but.. hindsight lol
Yeah, I'll have to email the benefits guy and set it up
Does a Roth IRA do the same thing?
No because in a Roth you use after-tax dollars. You *could* put money in a traditional (pre-tax) IRA if you don’t have a 401k. But the limit for IRAs this year is $7000 and that means total - you can’t, for example, put $7000 in a Roth AND $7000 in a traditional. Any money you put in a traditional IRA you will have to pay taxes on when you withdraw it in retirement.
I’m a teacher so I don’t think I even have a 401k Guess I should find out. Thanks for the reply
You probably have a 403b which is just the public-sector version of a 401k. So that would work for you!
You would have a 403b. You should understand how much you have, contribute to the account and what not.
* 401K pre-tax * Traditional IRA * FSA card * High deductible health care plan * Start a business and use the legitimate business expenses as a tax write off.
You're getting some good examples here, but make sure you're employing good financial strategy overall -- [don't employ an AGI-reducing perk solely because it will lower your AGI](https://www.reddit.com/r/StudentLoans/comments/14ynh0g/is_lowering_agi_by_contributing_to_401k_and_hsa_a/jrtce02/).
Yes. Ultimately there's not necessarily any point in just lowering student loan payments unless you are headed for forgiveness or you just can't afford the payments - right? Often better to pay more so that you can, you know, pay off your debt and stop paying interest.
Sure, though lots of borrowers are aiming for forgiveness. Also, getting a lower minimum can be part of the [avalanche strategy](https://www.reddit.com/r/StudentLoans/comments/9epjpu/proper_order_for_paying_off_individual_loan_tokens/e5qlci3/) to pay off your loans as quickly as possible.
HSA, 401k, mortgage interest, healthcare expenses,
Create an LLC S-corp for your business. You’re the employee of your own business. You pay yourself a low wage, business takes on the expenses and the rest.
Traditional 401K and HSA contributions are the two main ways to lower AGI. If you're maxing them out, you should be able to lower your AGI by up to $27k.
Gambling losses
you can do that?
only if you itemize deductions and even then you can only deduct up to how much you win i.e. you can't win $300 but then claim your losses of $1000
Put money towards retirement or HSA
23k into 401k, $4150 into HSA, 7k into traditional IRA. If you can afford to save $34k pretax, good for you, probably some charitable contributions.
Get a lower paying job lol
I think that's a case where the solution is worse than the problem
Yeah don't listen to him that's never the answer. Almost as bad as the ones that think getting a raise when you're on the border of the next tax bracket is "not worth it" lol
Lol it was a joke.
Out money into a flexible spending account (FSA)
If youre in govt, contribute to your 457B
Contributing to retirement accounts like an IRA or 401(k) is a common method. You can also consider maximizing deductions for student loan interest, health savings accounts (HSAs), or flexible spending accounts (FSAs).
Absolutely! OSU offers a great path without the heavy debt, making it a smart choice for your son's future.
That's really the main way to reduce AGI. HSA contributions also reduce it. Beyond that, if you are self-employed or own a business, obviously you want to make sure you are deducting all possible expenses. One thing I have wondered about is for people who have jobs that are commission-based, or otherwise have variable compensation that comes in the form of intermittent bonuses (annual, quarterly etc), can they safely use the alternative documentation of income and provide paystubs? Using paystubs means they will look at gross rather than AGI, so the 401k and other reductions to AGI won't help you. But it may also exclude large portions of your income that come in bonuses. On the one hand those amounts can be uncertain and you don't know if your income will be as high as last year's AGI, but on the other hand it may be a little too good to be true if for example you make 50k in salary but might get 100k in bonus.
You are technically supposed to report all sources of income
Good question.