Deductions reduce your taxable income, so it’s in your best interests to claim as many as possible when filing your tax return.
To get the most lucrative tax deductions, you need to itemize expenses using a Schedule A. This form lets you write off mortgage interest, real estate taxes, charitable contributions and some medical expenses.
However, the Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, which means fewer people itemize now. The standard deduction is available to almost all taxpayers who aren’t dependents and, for tax year 2022, is set at $12,950 for single taxpayers and $25,900 for married couples filing jointly.
While the standard deduction makes more sense financially for most people nowadays, there are still deductions you can claim even if you don’t itemize your return. Keep reading for some of the deductions that anyone can claim.
1. Some charitable donations
Normally, you’d have to itemize deductions to write off charitable contributions. However, the Coronavirus Aid, Relief and Economic Security (CARES) Act included a provision to allow all taxpayers to claim a $300 deduction for monetary charitable donations made in 2020.
A later bill was passed to extend this deduction into 2021 and increased it to $600 for married couples filing jointly, while keeping it at $300 for single filers. As a result, taxpayers will be able to claim this deduction on the returns they file in 2022, assuming they made eligible contributions last year.
2. Traditional IRA contributions
If you have an individual retirement account, otherwise known as an IRA, you can deduct contributions up to an annual limit set by the IRS. For the 2021 tax year — the one for which your tax return is due this spring — workers younger than age 50 can contribute up to $6,000 to an IRA while those age 50 and older can contribute up to $7,000. Those limits will remain in place for the 2022 tax year as well.
Only contributions to a traditional IRA are tax-deductible. Roth IRAs aren’t eligible for a deduction since they come with a different set of tax perks.
3. HSA contributions
If you have a qualifying high-deductible health insurance plan, you can open a health savings account (HSA) and deduct your contributions. For the 2021 tax year, those with self-only coverage could contribute up to $3,600 to an HSA while those with family coverage had a contribution limit of $7,200.
For 2022, the limits have been raised to $3,650 for those with self-only coverage and $7,300 for those with family plans. During both years, those age 55 and older are eligible to make an additional $1,000 in contributions.
4. Penalties for early withdrawals of savings
Some investments, such as certificates of deposit (CDs), require that you leave money in an account for a certain period. If you don’t, you could get hit with an early withdrawal penalty. Fortunately, the IRS allows people to deduct the penalties reported on Forms 1099-INT or 1099-OID.
However, note that this deduction does not apply to penalties on early withdrawals from retirement accounts such as IRAs.
5. Student loan interest
Depending on your income, you may be entitled to deduct student loan interest from your taxes. For the 2021 tax year, up to $2,500 in interest can be deducted by those who meet income requirements.
The ability to deduct student loan interest begins to phase-out for single taxpayers once their modified adjusted gross income reaches $70,000, and the deduction is eliminated for those with incomes greater than $85,000 per year. For married couples filing jointly, the deduction begins to phase-out at incomes of $140,000 and is eliminated at $170,000.
6. Educator expenses
Educators working at the elementary or secondary level can deduct up to $250 of out-of-pocket expenses related to their job. These costs can include computers, classroom supplies and professional development courses, among other things. For 2021, the deduction also includes protective equipment such as face masks, sanitizer and air purifiers.
7. Alimony paid
If you are making alimony payments to a former spouse, you may be able to deduct those payments from your income. However, this deduction does not apply to everyone. As the IRS says:
“You can’t deduct alimony or separate maintenance payments made under a divorce or separation agreement (1) executed after 2018, or (2) executed before 2019 but later modified if the modification expressly states the repeal of the deduction for alimony payments applies to the modification. Alimony and separate maintenance payments you receive under such an agreement are not included in your gross income.”
8. Self-employment taxes
Federal Insurance Contributions Act (FICA) taxes fund both the Social Security and Medicare programs. While employees split these taxes with their employers, self-employed workers must pay the entire 15.3% tax themselves.
Fortunately, the IRS allows self-employed workers to deduct half that amount from their income taxes. Use Schedule SE or your favorite tax software program to calculate the tax and your deduction.
9. Self-employed health insurance premiums
Self-employed workers can also deduct premiums paid for health insurance coverage for themselves, their spouse and their children.
As with other deductions, there are rules about who is eligible and how much you can deduct. The Self-Employed Health Insurance Deduction Worksheet on Page 89 of the 1040 and 1040-SR instructions can help you figure out how much you can claim.
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