When you're claiming tax breaks to lower your tax bill, you can either itemize them or take the standard deduction. Claiming the standard deduction is certainly the easier way to go. But if you go that route, there are some above-the-line deductions that you don't want to forget about. In fact, there are a number of them that you can claim without having to itemize.
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Adjustments to Income
How can you claim additional deductions if you're taking the standard deduction? If you look at the income tax return Form 1040, you'll find a section labeled Adjusted Gross Income. Your adjusted gross income (AGI) is equal to your total income minus your adjustments to income.
Adjustments to income are basically extra deductions that reduce the amount of income that's taxed. Because they're above-the-line deductions, (they're literally above the line where you write in your adjusted gross income) anyone can claim them, no itemizing required.
There are many adjustments to income. Sometimes they change from year to year, but here are 11 kinds of expenses you can usually write off.
1. Educator Expenses
For tax year 2015, teachers, counselors and principals who aren't reimbursed for buying supplies can deduct up to $250. If they're married to another educator and they're filing jointly, the limit rises to $500. Taxpayers who itemize might be able to deduct more than $250 by claiming extra expenses as business expenses.
To claim the above-the-line deduction, you have to put in at least 900 hours of work in a given tax year. If you've taken money from a Coverdell savings account without paying taxes or you've received nontaxable funds from a tuition program, you're required to subtract those amounts from the total number of educator expenses.
You'll deduct your educator expenses on line 23 of Form 1040. For 2015, you can also write off these expenses on Form 1040A (line 16).
2. Student Loan Interest
Paying off your own student loans or your child's loans? You can get a tax break for up to $2,5000 of paid interest. But there are income limits.
If you're single, you're not eligible if your modified adjusted gross income (MAGI) is $80,000 or higher. For married couples filing a joint return, your MAGI must be below $160,000. If you're married but you're filing separately, you can't claim the deduction at all.
For 2015, student loan interest counts as an above-the-line deduction on Form 1040 (line 33) and Form 1040A (line 18).
3. Tuition and Fees
If you're in college or you're paying for a college student, you might be able to claim the tuition and fees deduction. The income caps are $80,000 for singles and $160,000 for joint filers. Again, you're out of luck if your filing status is married filing separately.
Anyone who claims any of the federal education tax credits – like the Lifetime Learning Credit – can't take this deduction either. You can write off your expenses on Form 1040 (line 34) or Form 1040A (line 19).
Check out our student loan calculator.
4. HSA Contributions
Anyone with a health savings account can get a tax break for contributions they've made using after-tax dollars. The catch is that these funds have to pay for qualified health expenses.
Single folks can deduct up to $3,350 for tax year 2015 and those with family coverage can deduct up to $6,650. For account holders who are at least 55, the maximum limits are $4,350 and $7,650, respectively.
5. Moving Expenses
You can potentially score a deduction for moving to another city to start a new job. The location of your new office must be at least 50 miles farther from your old home than your previous office was. If you're driving, you can either deduct the total amount you spend on gas and other car-related expenses or deduct 23 cents per mile.
In order to write off your moving expenses, you need to work for a certain number of weeks. If you're an employee, you're required to work full-time for a minimum of 39 weeks during your first year. Self-employed individuals have to meet the same requirement and work for 78 weeks within a two-year period.
6. IRA Contributions
Your ability to qualify for the traditional IRA deduction depends on your income level and whether you or your spouse has an employer-sponsored retirement plan. Single savers with a 401(k) or a similar account at work can take the full deduction if their MAGI is $61,000 or less. Singles without an employer plan, however, can get a tax break for their IRA contributions regardless of how much they make. Once you turn 70 1/2, you're no longer eligible for the deduction. And there's no deduction for Roth IRA contributions.
7. Self-Employed Retirement Contributions
By socking away money in a SEP-IRA, a SIMPLE IRA or a SIMPLE 401(k) plan, you can earn a tax break. For SEP plans, the most you can deduct is 25% of your total compensation, or up to $265,000 for 2015. For SIMPLE plans, employees can deduct up to $12,500 ($15,500 if you're at least 50). Employers can write off up to $7,950 if they're matching their workers' contributions.
8. Early Withdrawal Penalties
If you withdraw earnings from a certificate of deposit (or another time-deposit account) before it matures, your bank will charge you a fee. That's too bad. Fortunately, you can deduct the full amount of the penalty on Form 1040.
Related Article: What Is a Certificate of Deposit?
9. Alimony Payments
You can write off the alimony payments you've made to an ex-spouse even if you're claiming the standard deduction. Child support payments, however, are not tax-deductible.
10. Certain Business Expenses
For the most part, employees have to itemize their business expenses using a separate form (Schedule A). But some workers – like performing artists and certain government officials – can simply include them on their regular tax returns.
11. Jury Duty Payments
Besides the above-the-line deductions that appear on Form 1040 and Form 1040A, there are other tax breaks (called write-in adjustments) that you can write in and claim without itemizing. Whatever you earn from jury duty, for instance, counts as a write-in adjustment if you agree to hand it over to your employer.
Taking the standard deduction instead of itemizing can save you a lot of time and effort. But by forgetting to claim the bonus deductions on your tax return, you could end up paying more taxes than you need to.
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