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What Can I Write Off on My Taxes?

Gabrielle Olya
·12 min read
kate_sept2004 / Getty Images
kate_sept2004 / Getty Images

You’re probably already aware that you don’t have to pay federal income tax on all of your earnings. But exactly what are you allowed to deduct from your taxes to lower your total taxable income? Although certain tax deductions remain relatively stable from year to year, others change or disappear entirely, while new ones occasionally crop up.

Find Out: What Are the 2020-2021 Federal Tax Brackets and Tax Rates?

If you have a complicated financial life or tax situation, you may want to consult with a certified public accountant to ensure you’re not overlooking additional valuable deductions.

Here’s your chance to brush up on the most common tax deductions available for tax year 2020.

Last updated: Jan. 15, 2021

RgStudio / Getty Images/iStockphoto
RgStudio / Getty Images/iStockphoto

What Is a Tax Deduction?

A tax deduction is an expense that you can subtract from your income for tax purposes. Tax deductions lower your total amount of taxable income and therefore the total amount of tax you have to pay. Generally, tax deductions are used to encourage certain activities on behalf of individual taxpayers, such as contributing to a retirement account, investing in a business or providing for a dependent.

More: The Wildest Things Your Taxes Are Paying For

izusek / iStock.com
izusek / iStock.com

Tax Deductions Available for the 2020 Tax Year

Here’s a look at the tax deductions you may be eligible to take for tax year 2020. While it doesn’t cover every single tax deduction that’s possible, the following list includes most of the major deductions available to you.

Learn: Only 18% of Americans Believe Their Tax Dollars Are Being Spent the Right Way

Stígur Már Karlsson /Heimsmynd / Getty Images
Stígur Már Karlsson /Heimsmynd / Getty Images

1. Medical and Dental Expenses

You can deduct medical and dental expenses for yourself, your spouse and your dependents.

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. However, you can only deduct the amount of your total medical expenses that exceed 7.5% of your adjusted gross income.

Find Out: Most Popular Things To Do With Your Tax Refund — and How To Do It Smarter

visualspace / Getty Images
visualspace / Getty Images

2. Self-Employed Health Insurance

Self-employed individuals with a net profit can deduct self-employed health and long-term care insurance without having to itemize deductions. You can include premiums for yourself, your spouse, your dependents and your children, whether or not the children are your dependents, as long as they age 26 or younger on Dec. 31, 2021.

Stay Safe: How To Protect Your Tax Refund From Being Stolen

6okean / Getty Images/iStockphoto
6okean / Getty Images/iStockphoto

3. 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 recent 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.

Find Out: What Does Tax Deductible Mean and How Do Deductions Work?

jacoblund / Getty Images/iStockphoto
jacoblund / Getty Images/iStockphoto

4. 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, if the tax amounts are based on the value of the property

  • Local and state real estate taxes

  • Foreign, local and state income taxes

RichLegg / Getty Images
RichLegg / Getty Images

5. Jury Duty Pay

If you gave jury pay to your employer because you were paid via salary while you served on a jury, you must still report the payment as income, but you can deduct it from your taxable income.

©Shutterstock.com / Shutterstock.com
©Shutterstock.com / Shutterstock.com

6. Volunteer Work Donations

You can deduct certain expenses for charity work, such as the cost of gas if you use your car to travel to and from the volunteer site. 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 that you wear to a volunteer site or the cost of parking in a garage if that’s required. Just make sure you get documentation from the charity.

CiydemImages / Getty Images/iStockphoto
CiydemImages / Getty Images/iStockphoto

7. Charitable Cash Contributions, Even if you Don't Itemize

Due to the coronavirus pandemic, the IRS has temporarily lifted restrictions on how much of your adjusted gross income you can deduct as charitable cash contributions. In addition, the requirement that you itemize deductions in order to claim charitable cash contributions has been lifted for the 2020 tax year.

mediaphotos / Getty Images
mediaphotos / Getty Images

8. Mortgage Interest

If you took out your mortgage on or after Dec. 15, 2017, you can deduct the interest you paid on loans of $750,000 or less. But if you’re married and filing separately, you can only deduct the interest on loans of up to $375,000.

If your mortgage existed as of Dec. 14, 2017, you can deduct up to $1 million.

gradyreese / Getty Images
gradyreese / Getty Images

9. Mortgage Points

If you itemize, you can deduct the points — or prepaid interest — that 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.

sturti / Getty Images
sturti / Getty Images

10. Home Sale

If you sold your primary 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.

Tempura / Getty Images
Tempura / Getty Images

11. Investment Interest Expense

You can, however, claim a deduction for your investment interest expense, 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.

Kit Leong / Shutterstock.com
Kit Leong / Shutterstock.com

12. Gambling Losses

If you suffered gambling losses in 2020, you can deduct up to the amount of gambling income that you reported. You can claim your losses as an “other miscellaneous deduction,” but be prepared to show proof of your winnings and your losses.

Paying a Professional Helps: How One Mistake on My Taxes Almost Resulted In Fraud

inhauscreative / Getty Images
inhauscreative / Getty Images

13. Some Disaster Losses

You can only deduct disaster losses, which the IRS refers to as casualty losses, if the loss occurred in a federally declared disaster area and you weren’t reimbursed for it by your insurance company.

MivPiv / Getty Images/iStockphoto
MivPiv / Getty Images/iStockphoto

14. 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 that you report on your tax return.

Igor Palamarchuk / Shutterstock.com
Igor Palamarchuk / Shutterstock.com

15. Health Savings Account Contributions

Health savings accounts are tax-exempt accounts that you use to pay or reimburse certain medical expenses. You can claim a tax deduction on contributions of up to $2,700 per year that you or someone other than your employer made to your account.

Georgijevic / Getty Images
Georgijevic / Getty Images

16. IRA Contributions

Although IRS rules don’t allow deductions for Roth IRA contributions, you might be able to claim the amount that you put in a traditional IRA, as long as you — and your spouse, if you’re married — don’t have an employer-based retirement account.

For 2020, you can take a deduction up to the full amount of allowable contributions, which is $6,000 — or $7,000 if you’re age 50 or older. For 2021, those numbers will remain the same.

katleho Seisa / Getty Images
katleho Seisa / Getty Images

17. 401(k) Contributions

401(k) plans provide a special tax status for retirement savings and immediate tax benefits. When you contribute to your 401(k), you’ll effectively lower the amount of your taxable income, so there’s a smaller impact on your take-home pay. For tax year 2020, contribution limits are $19,500, or $26,000 if you’re age 50 or older.

FG Trade / Getty Images
FG Trade / Getty Images

18. 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 may contribute up to $5,000 tax-free toward an FSA every year.

FSAs are use-it-or-lose-it accounts that let you carry over just $500 a year. However, that rule was relaxed for 2020 due to the pandemic. This year, you can roll over all your unused 2020 contributions for use in 2021 or 2022.

The Craziest Ways People Have Done It: How To Avoid Paying Taxes Legally

Django / Getty Images
Django / Getty Images

19. Home for Business Use (for the 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.

Unfortunately, this deduction is not available to employees who worked from home because of the pandemic, even if you were required to work remotely.

eclipse_images / Getty Images/iStockphoto
eclipse_images / Getty Images/iStockphoto

20. 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.

YakobchukOlena / Getty Images/iStockphoto
YakobchukOlena / Getty Images/iStockphoto

21. Business Travel Expenses

You might be able to deduct ordinary and necessary 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.

Self-employed individuals claim these expenses on Schedule C (Form 1040). Employees use Form 2106.

©Shutterstock.com / Shutterstock.com
©Shutterstock.com / Shutterstock.com

22. Educational Expenses

Under the American opportunity tax credit, you can deduct up to $2,500 per student for four years of postsecondary education. The credit is partially refundable, which means you can get up to 40% of the credit, or $1,000, as a refund if the credit reduces your tax liability to $0.

Dan Gold / Unsplash
Dan Gold / Unsplash

23. Work-Related Meals and Gifts

After the tax reform in 2017, entertainment expenses for business purposes were no longer deductible, and meal deductions were limited to 50%. That remains true for business entertaining you did in 2020. However, 2021 and 2021 business meals and beverages, including takeout and delivery, are 100% deductible.

The cost of gifts for business purposes can be deducted in total or in part, depending on the circumstances.

PeopleImages / Getty Images
PeopleImages / Getty Images

24. 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 2020, the maximum amounts range from $538 to $6,660.

jacoblund / Getty Images/iStockphoto
jacoblund / Getty Images/iStockphoto

25. Educator Expenses

K-12 educators can deduct up to $250 of unreimbursed expenses for books, supplies and computer equipment. To qualify, you must work at least 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.

skynesher / Getty Images
skynesher / Getty Images

26. 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.

mixetto / Getty Images
mixetto / Getty Images

27. Noncash Donations

If you choose to itemize your taxes, 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.

Know: How To Itemize Deductions Like a Tax Pro

mapodile / Getty Images
mapodile / Getty Images

28. Standard Tax Deduction

The standard deduction for tax year 2020 is $24,800 for married couples filing jointly and for qualified widows and widowers. For single filers and married couples filing separately, the deduction is $12,400. If you file as head of household, you can deduct $18,650.

mediaphotos / Getty Images/iStockphoto
mediaphotos / Getty Images/iStockphoto

How To Claim Tax Deductions

You can claim a tax deduction when you file your income taxes every year. Different deductions appear on different forms, so you must either hire a tax professional, use tax software or follow IRS instructions yourself to determine exactly where to file them.

One of the most important considerations when filing your taxes is whether you should claim the standard deduction or if you should itemize your deductions. Here’s the distinction between the two:

  • Standard deduction: The standard deduction is a dollar-for-dollar reduction of your taxable income. Nearly all taxpayers are entitled to this deduction. For tax year 2020 (filing in 2021), the standard deduction is $24,800 for those with the tax status of married filing jointly. Single filers are entitled to a standard deduction of exactly half this amount. For tax year 2020, you can claim your standard deduction on Line 12 of your Form 1040.

  • Itemized deductions: Itemized deductions are expenses that qualify as deductions against your income. Most of the deductions listed in this article are itemized deductions. If your total itemized deductions exceed your allowable standard deduction, you’re usually better off claiming your itemized deduction and forgoing your standard deduction. You must claim your itemized deductions using Schedule A, which then transfers to Line 12 of your Form 1040.

kate_sept2004 / Getty Images
kate_sept2004 / Getty Images

What Can I Write Off on My Taxes?

Every individual has a unique tax situation, so there’s no one answer as to what tax write-offs you can take. However, everyone has some type of tax deduction that they’re eligible for, even if it’s just the standard deduction. The key is to keep accurate records of all of your expenses for the year so you can compare them with IRS regulations to determine if you qualify for certain deductions.

If your taxes are simple, you can calculate them yourself with some tax software. However, if your taxes are complicated, you may want to enlist the services of a CPA. This way you can ensure that you’re finding all of your allowable deductions and paying the lowest amount of tax that’s legally possible.

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Daria Uhlig contributed to the reporting for this article.

This article originally appeared on GOBankingRates.com: What Can I Write Off on My Taxes?