Tax Deductions for Income Tax Returns
A tax deduction on your tax return reduces your Adjusted Gross Income or AGI and thus your taxable income on your income tax return, thus either increasing your tax refund or reducing your taxes owed. Standard deductions are calculated for your by Taxpert, thus you do not have to enter the amounts. When you file individual taxes, you have the option to either use standard deduction or itemized deductions.
It's not just about how much income you make, but how much of your share of your pie you get to keep!
When you prepare and e-file your taxes on Taxpert.com, the tax app will prompt you for applicable tax deductions and tax credits. This will assure you that you don't overlook any qualified deductions.
Tax credits are similar to tax deductions, but they reduce your tax bill dollar-for-dollar. We will compare tax deductions with tax credits in more detail below and list the most popular tax deductions you may qualify to claim on your tax return.
Tax deductions can be complicated, so let Taxpert help you with your deductions if this information overwhelms you. We will determine which deductions are best for you based on your answers to a couple of easy tax questions. Then, we will calculate the deduction amount for you. It's that simple!
Your Income Tax Return Deductions
Review the tax deductions below you may be able to claim on your return. The Taxpert platform will calculator these deductions and report them on the proper IRS forms for you based on your entries - start here.
Deduction Expense Claim Period
Generally, eligible tax deduction expenses have to occur during the given tax year, January 1 - December 31, so you can claim them on your tax return. The exception to this can be retirement or health plan contributions, which can be made during a time frame in the following calendar year of the given tax year; usually not beyond the
tax return due date. Check the specific deadlines of the plan(s).
Standard vs. Itemized Deduction?
These are deduction methods on how you apply deductions on your tax return form. The Taxpert app will determine which is most tax advantageous to you, whether to itemize or use standard deductions on your return. Simply enter your tax data and get the results when you prepare your return on Taxpert.com. This decision can be difficult to make as there are benefits to both depending on your personal tax situation - Taxpert helps you choose the most tax beneficial method for you.
Dependents, Relatives
Claim one or more
dependents on your tax return by entering their information and the Taxpert app will do the rest for you. You can determine whether a person is indeed a qualifying dependent in the eyes of the IRS. We make it simple for you to find out via the Taxpert's
free Dependent Tax Calculator tool. Simply answer a few questions on how a person relates to you and you will get the answer.
If a person does not qualify as a dependent, they may be classified as a qualifying relative. To find out, use this
free qualifying relative tax tool. Tip: Even though it says relative, the person does not have to be a relative of yours (a boyfriend, girlfriend, etc. may qualify).
Life Changing Event Deductions
Marriage, divorce, children,
home purchase or sale, death, and job changes are all life changing events that can have implications on your tax return filing status and eligible tax deductions. When you prepare and e-file your taxes, you will be asked about these and other tax deductions. You will enter the information and the Taxpert app will do the math for you.
Home Mortgage Interest
The
mortgage interest deduction as reported to you on Form 1098, Line 1, can be claimed as a deductible expense on your tax return.
Beginning in Tax Year 2018, the amounts of qualified residence debt or loan amounts changed. All you have to do is enter the interest amount - from Form 1098, from Line 1 - during your tax interview on the Taxpert app either the itemized deduction or standard deduction method will be applied - whichever is most tax advantageous for you. As a mortgage owner, you can also deduct points paid on the purchase of real property. Points are referred to as interest paid in advance or simply pre-paid interest made on a home loan to improve the rate on the mortgage offered by the lending institution.
SALT
You can deduct State and Local real estate and personal property Taxes (SALT), as well as either state and local income taxes or general sales taxes up to $10,000. Important: This amount was NOT increased up to $80,000 as part of the Build Back Better Plan which failed to pass in 2022. The itemized method is required to claim SALT. However, it might not be in your best interest if the new standard deduction amount exceeds that of the itemized amount. The Taxpert app will work for you by applying the best deduction method for you - either standard or itemized deduction.
If you make contributions to a traditional Individual Retirement Account or IRA, these may be tax deductible. However, Roth IRA contributions are not tax deductible, but your account grows tax free. Traditional IRA contributions are often deducted from your paycheck - simply report your IRA contributions on your Taxpert account so any deductions can be assessed. If you are self-employed and make deductions to a SEP, SIMPLE, or other qualified retirement plan, these are generally deductible regardless of if you itemize. Additionally, you may be able to deduct an early withdrawal penalty on Schedule 1 to reduce your income.
Home Office Expenses
Are you working from home as
self-employed or independent contractor with 1099 type income? Find out which related home expenses you might be able to deduct. These expenses can also be claimed if you take the standard deduction - qualified business expense deductions are reported directly than itemized deductions.
Energy Efficient Home Improvement
There are no direct expense deductions for energy efficient home improvements, but there are tax credits.
Long Term Care
Long term care insurance premiums can be reported on your tax return and may qualify for a tax deduction. The long-term care expenses must be for medically necessary services, such as therapy or rehabilitation. Be sure to check with the insurance provider to learn about the particulars with your plan and report it on your return.
Medical Expense Deductions
For Tax Year 2022, you can only deduct the amount of the total un-reimbursed allowable medical care expenses for the 2022 tax year that exceed 7.5% of your adjusted gross income - this applies for 2021, 2020, and 2019 returns as well. Let's say your AGI is $40,000 and your medical expenses are $5,000. You could claim $40,000 * 7.5% = $3,000, $2,000 of the $5,000 exceeds the 7.5%, so you can deduct $2,000 for Tax Year 2022. You can deduct medical expenses such as medications, dental treatments, eye doctor visits, and hospital fees and services.
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are Medical Savings Accounts that can be used as options to deduct medical expenses. A Health Reimbursement Arrangement (HRA) is an employer-sponsored plan to reimburse for medical expenses. This may also be for an Archer MSA.
See details on Medical Savings Accounts.
Health Insurance
Health insurance premiums may be tax deductible if you are self-employed. This is an above-the-line deduction reported on Schedule 1 when you prepare and e-file your taxes on Taxpert.com. Additionally,
claim the Premium Tax Credit as an advance payment to offset your premium.
Charitable Contributions and Donations
Find out which charitable contributions and donations you can claim on your tax return as a deduction. The easiest way to find out is
to start free on Taxpert.com as the app will guide you through this before you e-file your return.
Education Expenses, Credits
Student or education related tax deductions and student tax credits have changed since the latest tax reform in 2018. Education Savings Plans, or 529 Plans, can now be used for K-12 student education as well. The
Tuition and Fees Tax Deduction was brought back by Congress in late 2019 for Tax Years 2018, 2019, and 2020, but not 2021 nor 2022. The Taxpert app will help you claim the student loan interest deduction. To claim the deduction on your 2020 or other previous year return, you will need to file a
tax amendment. Many educational assistance programs are tax free if they meet certain requirements. This is often referred to as tuition reduction and you don't have to include a qualified tuition reduction in your income on your tax return.
General Employee Job Expense Deductions
A
general overview of employee related job expense deductions, such as travel or meal expenses - most miscellaneous employee deductions are no longer available for 2020, 2021, and 2022. For car mileage expenses, teacher or educator related expenses, see further below.
Car Mileage, Vehicle Expenses
Did you use your car for business, medical, or charitable purposes? If so, you may be able to deduct your vehicle use as a business expense. Otherwise, one of the following requirements as an employee has to be met:
- Qualified performing artist
- Fee-basis state or local government official
- Armed forces reservist
- Impairment-related work expenses
- Your employer entered code "L" for box 12 of your W-2.
Teacher, Educator Expense Deductions
As a
teacher or educator, you can deduct certain job-related expenses, such as books, supplies, computer equipment, software, or essential services on your tax return. These can lower your tax and help you get back more of your hard-earned money as a tax refund. As a teacher or instructor, you do not have to itemize to claim this deduction.
Self-Employment Expenses
Find out what type of work qualifies as
self-employment or independent contractor. As either, the tax return implications are different than those of a W-2 wage earner. You are responsible for self-employment taxes via Schedule SE - however, you can also deduct a percentage of your self-employment tax on Schedule 1 as an above-the-line deduction. You can
prepare and e-file your taxes with self-employment or independent contractor income, with W-2 income, or both - the Taxpert application will help you report all your income and claim the proper deductions.
The Qualified Business Income deduction (or QBI deduction) allows you to deduct up to 20% of qualified business income for most self-employed taxpayers or small business owners - this can be used whether or not you itemize your deductions.
Deductible Alimony
For divorce decrees finalized before January 1, 2019, alimony payments may be tax deductible for the payer. Deductible alimony can be reported on your tax return and included on Schedule 1. Simply include a few pieces of information regarding your payments on your Taxpert account and the tax app will report it on the form for you. However, if your divorce was finalized in 2020 or later and you are filing taxes, you do not report your alimony on your return as it is no longer deductible.
Gambling Losses
Find out how to apply gambling losses on your tax return. Losses from gambling can be deducted as itemized deductions up to the amount of your winnings.
Investment Interest
Interest you paid on money you borrowed for an investment property is generally deductible. This does not
include interest from passive activities or securities that generate tax-exempt income.
Miscellaneous Deductions
All miscellaneous deductions subject to 2% of your AGI are
eliminated for Tax Years 2018-2025. You can manually file the information for
2017 and earlier tax returns, and potentially for 2026 and later tax returns.
Moving Expense Deduction
The moving expense deduction was effectively suspended - due to the 2018 Tax Reform Act - starting with
Tax Year 2018 until the 2026 Tax Year. However, if you are on
active military duty, you can still deduct relocation expenses based on a military relocation order. Some
states - like Massachusetts - still have the moving expense deduction for everybody.
Tax Tip: If your employer asks you to move, you might want to ask for an expense reimbursement as
taxable income.
Jury Duty Deduction
Jury duty pay is a form of
taxable income that must be reported on a tax return. There is a jury duty pay deduction for employed taxpayers who receive income from their employer during the period of jury duty. If you receive both payment from your job and jury duty pay, you may have to give your jury duty pay to your employer. On your taxes, report the jury duty pay as income, but can deduct it if you paid it in this way. The Taxpert App will figure this for you when you enter this information.
There are no direct childcare expense deductions you can claim, however, you should explore if you are eligible for the
Child Care Tax Credit via the
Childcare Credit Tool. It's easy to use and gives you instant answers. Did your receive dependent care benefits from your employer during the year? If so, you may be able to exclude some or all of them from your income. For example, on Form 2441, Part III, the tax app will determine your child care tax credit amount.
Child Adoption Expenses
While not a deduction, the
Adoption Tax Credit is a tax credit designed to help with the expenses related to adopting a child under the age of 18 (including a child with special needs). When you
start preparing your return for free on Taxpert.com, include your adoption expenses and the credit will automatically be calculated and reported for you by the tax app and applied to your tax return. Thus, no complicated math or guessing is required by you.
Other Tax Items and Deductions
The more common tax deductions in the table above; below, find various tax items based on deductions. While the Taxpert platform will help claim deductions and credits, use the information below to tax plan or to simply get a better understanding of your tax situation.
Make sure you don't miss any of these qualifying tax credits. Tax credits directly reduce your taxes due and may even be refundable to you in the form of a tax refund.
Nondeductible Expenses
Home repairs and contributions to political campaigns are only two examples of a wide range of expenses you cannot claim as a tax deduction on a tax return. However, this list is dynamic and can change from year to year. The Taxpert app will not include nondeductible expenses when you prepare and e-file your taxes so you don't have to worry about whether or not you are claiming only valid deductions.
Extended, Expired Tax Breaks
Recent and ongoing tax reforms extend or let tax breaks expire; Taxpert.com will only claim up-to-date tax breaks when you e-file your taxes.
Tax Deduction Planning Tips
Keep up-to-date on tax deduction changes throughout each tax year. For example, tax plan for your deductions when life changing events (marriage, children, job changes, education, etc.) take place. Keep track of your taxes and finances with this
tax planning checklist. At any time,
sign up for a free Taxpert account to get ready for tax season.
All Year Tax Planning Tips
Not only know the latest tax deduction changes, but also have on overall tax return plan in place. For example, use the Taxpert.com Taxometer to calculate your tax withholding based on your tax return goals. In other words, taxercise your paycheck!
Use the free Taxpert W-4 Taxometer.
The following are other, less common tax deductions and/or adjustments to income that the Taxpert app will calculate and report on Schedule 1, Part 2:
- Expenses for income from personal property rental
- Nontaxable amount of the value of Olympic/Paralympic medals or USOC prize money
- Reforestation amortization and expenses
- Repayment of supplemental unemployment benefits under the Trade Act of 1974
- Contributions to Section 501(c)(18)(D) pension plans or certain chaplains to Section 403(b) plans
- Attorney fees, court costs paid in connection with an IRA award for information provided to detect tax law violators or those involving certain unlawful discrimination claims
- Housing deduction from Form 2555 - see foreign earned income
- Excess deductions for Section 677(e) expenses on Schedule K-1 (Form 1041).
When preparing your taxes on Taxpert.com, many of these deductions will be reported on Schedule 1. This is added to your Form 1040 and sent to the IRS, all generated by the tax app.
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