Deductions: Standard, Itemized,
Standard Deduction: a fixed amount that reduces the income on which you are taxed based on filing status.
- Married Filing Separately $5,350
- Married Filing Jointly or Qualifying Widower $10,700
- Head of Household $7,850
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.
|Should I Itemize?||Topic 501|
|Medical and Dental Expenses||Topic 502|
|Deductible Taxes||Topic 503|
Home Mortgage Points
|Interest Expense||Topic 505|
|Miscellaneous Expenses||Topic 508|
|Business Use of Home||Topic 509|
|Business Use of Car||Topic 510|
|Business Travel Expenses||Topic 511|
|Business Entertainment Expenses||Topic 512|
|Educational Expenses||Topic 513|
|Employee Business Expenses||Topic 514|
|Casualty, Disaster, and Theft Losses||Topic 515|
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 from the IRS
If you qualify, you can claim these deductions even if you don't itemize.
- Student Loan Interest Deduction up to $2,500
- Tuition and Fees Deduction up to $4,000 for higher education expenses.
- Moving expenses the cost of moving to a new job location
- Alimony, the amount of alimony you 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 your 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
Schedule C Business 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. Farmers and owners of rental property use Schedule E.
- home office expenses
- advertising and promotional costs
- business liability insurance
- legal and professional services
- car and truck expenses
- wages, employment taxes, employee benefit plans and retirement plans
For other deductible items, see schedules C and E. There are many rules and limitations pertaining to some of these deductions.