Here’s Every Single Tax Deduction You Could Possibly Ask For
This article originally appeared on GOBankingRates.com: Here’s Every Single Tax Deduction You Could Possibly Ask For
Despite the longest government shutdown in U.S. history, the IRS is still coming for your tax returns. On the bright side, the shutdown won’t stop you from getting your tax refund either.
This is the first year that the Tax Cuts and Jobs Act of 2017 will be in effect, which will likely impact you and your taxes. Many tax deductions — specifically the miscellaneous itemized deductions, including unreimbursed job expenses — have been repealed for the 2018 tax year. To make it easier for you to understand how you’ll be affected, GOBankingRates put together this list of tax deductions that you can still take advantage of to lower your taxes.
1. Medical and Dental Expenses
You can deduct medical and dental expenses for yourself, your spouse and your dependents. However, you can only deduct the amount of your total medical expenses that exceed 7.5 percent of your adjusted gross income.
2. Tax Preparation Fees (If You're Self-Employed)
Whether you do your own taxes with a tax calculator or pay someone else to do them, you can write off the fees on your miscellaneous tax deductions list — as long as you’re self-employed. Before the Tax Cuts and Jobs Act, anyone was eligible for this deduction, but it’s now only available to Schedule C filers.
3. Home Renovation for Medical Purposes
If you make improvements to your home for medical purposes — such as adding wheelchair ramps or lowering cabinets for better accessibility — you can deduct those renovations as medical expenses. If the renovations are made to increase the value of your home, however, you can’t claim them as medical-related expenses.
4. Local and State Sales Tax
Taxpayers have the option of deducting state and local general sales taxes or income taxes that they paid during the tax year, but not both. Under the new tax law, the deductibility of state and local tax payments for federal income tax purposes is now limited to $10,000 — or $5,000 for married taxpayers filing separately — in a calendar year.
If you live in a state with no income tax, consider deducting state sales tax and local sales tax that you paid.
5. State, Local and Foreign Taxes
You can claim certain taxes as itemized deductions. Apart from state and local sales taxes, you can also deduct:
Local and state personal property taxes
Local and state real estate taxes
Foreign, local and state income taxes
6. Jury Duty Pay
If you gave jury pay to your employer because you were paid via salary while you served on a jury, you can deduct jury pay from your taxable income.
7. Volunteer Work Donations
You can deduct certain expenses for charity work, such as the cost of gas if you use your car to get to and from the place you volunteer. If you don’t want to calculate the value per mile, you can deduct a standard rate of 14 cents per mile. You can also deduct the cost of purchasing and maintaining uniforms you wear to a place you volunteer or parking in a garage if that’s required. Just make sure you get documentation from the charity.
8. Bad Debt
If you lent money that you never got back, it’s considered a bad debt. Generally, to deduct a bad debt, you must have previously included the amount in your income or loaned out cash. You must also show that you attempted to collect the debt and that there’s no chance you’ll be able to recoup it.
9. Moving Expenses for Military Personnel
Previously, anyone who met the IRS distance and time tests after they relocated for a new job could take a moving expense deduction. This deduction is suspended under the new law. However, the suspension does not apply to members of the military who move due to a permanent change of station.
10. Airline Baggage Fees (If You're Self-Employed)
If you’re self-employed or you travel for business, make sure to deduct your baggage fees. If you’re not self-employed, you won’t be able to take this deduction, so opt for an airline with low baggage fees.
11. Mortgage Interest
You can deduct the interest you paid on loans of $750,000 or less, but if you’re married and filing separately, you can deduct the interest only on loans of up to $375,000. This marks a decrease from the previous year, when the limits were $1 million and $500,000, respectively. This new limit doesn’t apply if you had a binding contract to close on a home after Dec. 15, 2017, and closed on or before April 1, 2018.
12. Mortgage Points
If you itemize, you can deduct the points — or prepaid interest — you paid to purchase or build your primary home. Typically, if you can deduct all the interest you paid on your mortgage, you can also deduct all of the points.
13. Home Sale
If you sold your home at a profit, you can exclude up to $250,000 of gains from your income. If you’re married and filing jointly, you can exclude $500,000.
14. Self-Employed Health Insurance
Health insurance is tax-deductible for self-employed taxpayers. If you were self-employed in 2018, you can deduct premiums you paid for medical and dental insurance, as well as qualified long-term care insurance.
15. Investment Interest Expenses
Prior to the change in the tax law, investors could deduct expenses such as investment advice, IRA custodial fees and accounting costs. However, these miscellaneous deductions are eliminated for 2018. You can, however, claim a deduction for your investment interest expenses, which is the interest paid on money borrowed to purchase taxable investments. The amount that you can claim for the deduction is capped at your net taxable investment income for the year.
16. Gambling Losses
Gambling losses are one of the few itemized deductions that will remain intact for the 2018 tax year. If you suffered gambling losses, you can deduct up to the amount of gambling income you reported. You can claim your losses as an “other miscellaneous deduction,” but be prepared to show proof of those losses.
17. Alimony
If you paid alimony as part of a divorce or separate maintenance decree, you can deduct the amount you paid. Your payments qualify as alimony if:
You and your spouse or former spouse do not file jointly
Payments were made with cash, check or money order
You are legally separated and don’t live in the same household as your former spouse
Child support is not part of your payment
Payments went to your spouse or former spouse
Unfortunately, alimony will no longer be deductible for those who divorce after Dec. 31, 2018, according to the new tax law.
18. Car Registration Fees
If you meet certain requirements, you might be able to include some or all of your vehicle registration fees in your tax deductions. If part of your registration is deductible, you must itemize your deductions.
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19. Some Disaster Losses
Prior to the change in tax laws, any loss or theft related to your home, household items or vehicles was tax-deductible. However, deducting for personal casualty and theft losses is now suspended, unless the loss occurred in a federally declared disaster area.
20. Military Reservist Travel Expenses
If you travel more than 100 miles from your home as a military reservist, you can deduct travel expenses from the income you report on your tax return.
21. Health Savings Account Contributions
Health savings accounts are tax-exempt accounts you use to pay or reimburse certain medical expenses. You can claim a tax deduction on contributions that you or someone other than your employer made to your account.
22. IRA Contributions
Although IRS rules don’t allow deductions for Roth IRA contributions, you might be able to claim the amount you put in a traditional IRA, as long as you — and your spouse, if married — don’t have an employer-based retirement account.
For 2017 and 2018, you could have taken a deduction up to the full amount of allowable contributions, which was $5,500 — or $6,500 if you’re 50 and older. For 2019, those numbers increase to $6,000 and $7,000 if you’re 50 and older.
23. 401k Contributions
401k plans provide a special tax status for retirement savings and immediate tax benefits. When you contribute to your 401k, you’ll effectively lower the amount of your taxable income, so there’s a smaller impact on your take-home pay.
24. Dependent Care Flexible Spending Account
A dependent care flexible spending account lets you set aside pretax money for expenses related to caring for a child. This is not the same as the child tax credit, which you can use for a spouse, parent or other dependent with mental or physical disabilities. You’re allowed to contribute up to $5,000 tax-free toward an FSA every year.
25. Tuition
Whether you take the standard deduction or itemize, you can deduct up to $4,000 in qualifying higher education tuition and fees you paid for yourself, your spouse or a dependent for tax year 2018. If you’re married but filing separately, you don’t qualify for this deduction.
26. Membership Dues (If You're Self-Employed)
You can deduct professional society membership dues — but only if you’re self-employed. Before the latest tax reform, this deduction — including union dues — was available to all employees.
27. Work Uniforms (If You're Self-Employed)
Prior to the latest tax reform, anyone who was required to wear a uniform or specialized clothing as part of their job could deduct this expense. However, this deduction is now only available as a business expense to those who are self-employed.
28. Home for Business Use (If You're Self-Employed)
If you use part of your home for business, you might be able to deduct your home office as an expense. To qualify for this deduction, you must regularly use part of your home exclusively for conducting business and you must show that you use your home as your principal place of business. Prior to the change in tax laws, anyone who worked from home could qualify for this deduction, but now only those who are self-employed are eligible for this tax break.
29. Car for Business Use (If You're Self-Employed)
If you use your car for your job or business, you might be able to deduct the costs. You can either use a standard mileage rate or the actual-expense method, which is what it actually costs to operate the car for its business-use portion. However, under the new tax laws, this only applies if you are self-employed.
30. Business Travel Expenses (If You're Self-Employed)
You might be able to deduct business expenses you incur while traveling for work. Costs could include transportation, meals, lodging and airfare. Any expenses that are considered extravagant or lavish don’t qualify for the business travel expenses deduction. Under the new tax law, only people who are self-employed can get this deduction.
31. Educational Expenses
Under the American opportunity tax credit, you can deduct up to $2,500 per student for four years of postsecondary education. Good news for coming years: The credit is here to stay.
32. Work-Related Meals, Entertainment and Gifts
Meals and entertainment expenses for business purposes are deductible up to 50 percent, and costs for gifts for business purposes can be deducted in total or in part, depending on the circumstances.
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33. Earned Income Tax Credit
The earned income tax credit is a commonly overlooked tax credit for low- to moderate-income individuals. Although it’s not considered an IRS deduction, the EITC is a refundable tax credit meant to supplement income. For 2018, the maximum amounts range from $519 to $6,431.
34. Educator Expenses
K-12 educators can deduct up to $250 of unreimbursed expenses for books, supplies and computer equipment. To qualify, you must work 900 hours in a school year. Deductions can go up to $500 for married couples filing jointly if both parties are educators who incurred expenses.
35. Student Loan Interest
You can deduct some or all of any qualified student loan interest you paid during the tax year. You can deduct the lesser of $2,500 or the amount you actually paid. You can’t claim the deduction if you’re married and filing separately, or if you or your spouse are listed as dependents on someone else’s tax return.
36. Cash Donations
You can deduct cash donations to IRS-approved charities for up to 50 percent of your adjusted gross income. You must have written records of donations to deduct cash gifts in any amount — a copy of a bank record or statement from the organization will work. However, for certain private foundations, veterans organizations, fraternal societies and cemetery organizations, you can deduct only up to 30 percent of your adjusted gross income.
37. Noncash Donations
If you itemize, you can claim the fair market value — aka the price for which you could have sold the items — of clothing and household items you donated. If you plan to donate your car, make sure you donate to a qualified charity.
38. Senior Tax Deduction
Here’s some good money news for seniors: If you and your spouse were 65 and older by the end of the tax year, you’re eligible for a higher standard deduction.
39. Standard Tax Deduction
Although many itemized deductions have been suspended going into the 2018 tax year, the standard deduction has increased. It’s now $24,000 for married couples filing jointly and for qualified widows and widowers. For single filers and married couples filing separately, the deduction is now $12,000. If you file as head of household, you can deduct $18,000.
Click through to find out the No. 1 thing Americans do with their tax refund.
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Barri Segal and Taylor Bell contributed to the reporting for this article.
