Even if you are not able to itemized there are deductions available to you.

Due to the Tax Cut and Jobs Acts, many taxpayers have not been able to itemize. Even though this may be the case a common misconception in tax filing has been that if you use the Standard Deduction versus itemizing your deductions you have few additional benefits available to reduce your tax bill. This is often not the case.

Standard or Itemize?

Every taxpayer is able to take the Standard Deduction to reduce their income. Only if your deductions are going to exceed the standard deduction than you may choose to itemize your deductions. Normally, the primary reason individuals itemize is due to homeownership since most individuals’ mortgage interest and property taxes are typically high enough to put their deductions over the standard deduction amount.

Common sources of itemized tax-savings deductions are mortgage interest, property taxes, charitable giving, high medical expenses, and other miscellaneous deductions.

What is Available?

So what opportunities to reduce your taxable income are available if you use the Standard Deduction? Here are some of the most common:

  • IRA Contributions (up to $6,000 or $7,000 if age 50 or over)
  • Student Loan Interest ( up to $2,500)
  • Educator Expense Deduction (up to $250)
  • Alimony Paid (for divorce decrees prior to 2019)
  • Health Savings Accounts (if you qualify)
  • Self-employed health insurance premiums
  • ½ of self-employment tax
  • Numerous education incentives like; Savings Bond Interest, Coverdell accounts, American Opportunity Credit and Lifetime Learning Credit
  • Plus numerous credits including; Earned Income Credit, Dependent Care Credit, Child Tax Credit, Retirement Savings, and Elderly Credit

Income limitations often apply to these tax-saving deductions opportunities, but for those who qualify, the tax savings can be significant. This list is not complete but encompasses items that are most commonly used on tax returns. Are you still looking for more tax-savings deductions that you could use for this upcoming tax season? If so, contact us today as we would be grateful to consult with you.