Tax Tips

Tax Tip

Overview

Most people qualify for the standard deduction: $5,350 for Single and Married Filing Separately, $10,700 for Married Filing Jointly and Qualifying Widow(er), and $7,850 for Head of Household.
If itemized deductions are more than the standard deduction, itemizing will save you more.
You can claim above-the-line deductions whether you itemize or not.
Schedule C filers may qualify for additional deductions.

Deductions allow you to reduce your taxable income and also your tax bill. A deduction differs from a credit, which is applied directly to your tax bill, reducing it dollar for dollar. There are 4 major categories of deductions.

The Standard Deduction

Most taxpayers claim the standard deduction — a fixed amount that reduces the income on which you are taxed. Here are the standard deduction amounts according to filing status.

Single or Married Filing Separately — $5,350
Married Filing Jointly or Qualifying Widow(er) — $10,700
Head of Household — $7,850

Itemized Deductions

Certain kinds of deductions are called itemized deductions. If you have enough of them to beat the standard deduction, it's usually a good idea to itemize. For most taxpayers, purchasing a home makes itemizing worthwhile. Here are some other popular itemized deductions:

Medical Expenses — In addition to what you've spent on doctors, hospitals and medicine, other deductible items include health insurance premiums, prescription eyeglasses and contacts, hearing aids, medical transportation, equipment for disabled people, and nursing home expenses.
State and Local Income Taxes — Also includes personal property taxes.
Charitable Contributions — These include cash, volunteering expenses, property such as new and used household goods and items, securities, and vehicles donated to qualified charitable organizations.
Casualty Losses — If you suffered a loss because of theft, fire, storm damage or other casualty, you can deduct an unreimbursed loss if it is more than the sum of $100 and 10% of your adjusted gross income.
Unreimbursed Out-of-Pocket Job Expenses — Deductible expenses include vehicle expenses (other than commuting), travel expenses, uniforms, union dues and continuing education expenses.
Miscellaneous Expenses — Safe-deposit box fees, investment expenses, tax preparation fees and certain legal fees are examples of miscellaneous deductions. The deduction for this category of expenses is allowed only for the total of these expenses and unreimbursed job expenses that is more than 2% of your adjusted gross income. Note: There are a few miscellaneous deductions that are not subject to the 2% floor. These include repayments of amounts exceeding $3,000 that you previously included in your income, gambling losses, estate tax on income in respect of a decedent, and a decedent's investment in a pension.

Above-the-line Deductions

If you qualify, you can claim these deductions even if you don't itemize. There are also above-the-line deductions for self-employed individuals.

Student Loan Interest Deduction — up to $2,500
Tuition and Fees Deduction — up to $4,000 of qualified higher education expenses
Moving expenses — the cost of moving your family and belongings to a new job location
Alimony paid
Military reservists deduction — a deduction for non-reimbursable travel expenses for reservists who service more than 100 miles from home and stay overnight
Traditional IRA contributions — up to $4,000 ($5,000 if 50 or older)

Self-employment above-the-line deductions:

Half of your self-employment (Social Security and Medicare) tax
100% of self-employed health insurance premiums for yourself and family
Contributions to self-employed retirement plans, such as SEPs and SIMPLEs

See how much self-employment tax you'll owe this year with our Self-employment Tax Estimator.

Schedule C Deductions

If you own your own business, some additional deductions apply to you. These are claimed directly on your business schedule, called a Schedule C. (Note: Farmers and owners of rental property use Schedule E.)

advertising and promotional costs
business liability insurance
legal and professional services
car and truck expenses
wages, employment taxes, employee benefit plans and contributions to employee retirement plans
home office expenses
depreciations

For other deductible items, see the schedules. There are many rules and limitations pertaining to some of these deductions. Be sure to discuss them with your tax professional.

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Frequently Asked Questions

Question: I was the victim of a financial crime this year. Can I deduct the loss on my return? If so, how?
Answer: If the loss is a theft under local law, you may claim it as a theft loss on Form 4684, and carry the loss to Schedule A. It must be reduced by $100 plus 10% of adjusted gross income. If it was a worthless debt or investment, the amount is claimed as a short-term capital loss on Schedule D.

Question: Are home repairs deductible?
Answer: Generally home repairs are not deductible. Major repairs could add to your basis in your home. New carpet and a new roof are examples of major repairs.

Question: What's the most I can deduct for capital losses?
Answer: Your capital losses first reduce your capital gains. You can subtract up to $3,000 ($1,500 if Married Filing Separately) capital loss in excess of your gains from your other income. Any additional capital loss is carried forward to the following year.

More Deduction FAQs

Related IRS Forms & Publications