After the changes to the tax code that came from 2017’s Tax Cuts and Jobs Act, it no longer makes sense for most Americans to itemize. The changes to the tax law that year doubled the amount of the standard deduction, and now more than three quarters of Americans get back more money through taking that deduction than through itemizing.
However, that doesn’t mean you won’t be able to claim any deductions at all if you go with the standard deduction. In working with professional tax preparation services in Jamestown, ND, you will find a variety of other opportunities to reduce your tax liability without itemizing.
Here are some examples.
- Student loan interest: If you are paying off student loans (for yourself or a child), you may qualify for a tax break for up to $2,500 of interest paid for the year. However, you are only eligible for this deduction if you have a modified adjusted gross income of $80,000 or less ($165,000 or less for married couples filing jointly). Married couples filing separately cannot claim this deduction.
- HSA contributions: If you have a health savings account (HSA), you can get a tax break for contributions you make using post-tax dollars. Single people can deduct up to $3,500 and married couples can deduct up to $7,000, with additional deductions available for HSA holders over 55 years of age.
- Some business expenses: While the Tax Cuts and Jobs Act drastically overhauled the kinds of business expenses you can write off, there are still some business expenses you can deduct without having to itemize. If you’re a government official or performing artist, for example, there are expenses you can deduct on line 24 of Schedule 1.
- IRA contributions: Depending on your income level and whether or not you have an employer-sponsored retirement plan, you may be able to qualify for deductions from IRA contributions. Single people who also have a 401(k) through work can take a full deduction with a modified adjusted gross income of $63,000 or less. Without an employer plan, they can get a tax break for IRA contributions no matter their income level. You are no longer eligible for this deduction when you reach 70.5 years of age.
- Educator expenses: If you are a teacher, principal or other educational professional who does not get reimbursed for purchasing supplies, you can deduct up to $250. If you’re married to another educational professional, you can double that deduction. You will do this using line 23 of Schedule 1.
- Jury duty payments: Anything you earn from jury duty qualifies as a write-in adjustment if you give the payment to your employer, because the employer paid your salary while you were out on jury duty.
These are just a few examples of some of the opportunities you have available to you to get some deductions on your taxes without itemizing. If you’re interested in learning more about your tax savings opportunities, or are looking for more general information about our tax and accounting services in Jamestown, ND, reach out to Craig S. Hanson, CPA today.