As a tax filer, you want to pay the IRS as little money as possible, and often, that means capitalizing on key deductions that exempt a portion of your income from taxes. The challenge this year, however, is that the 2018 tax overhaul nearly doubled the standard deduction, thereby making it less practical for filers to itemize.
In 2017, the standard deduction was $6,350 for single tax filers, and $12,700 for married couples filing jointly. For the 2018 tax year (the year you're filing taxes for this year), it's $12,000 for single tax filers and $24,000 for joint filers. As such, taxpayers will need to rack up a much larger amount in deductions to make itemizing worthwhile.
IMAGE SOURCE: GETTY IMAGES.
That said, there are certain deductions you're allowed to claim even if you don't itemize on your tax return. These deductions are known as adjustments to income or above-the-line deductions, since they appear on Form 1040 above your adjusted gross income. It pays to see if you're eligible for any of the following, because they could put a fair amount of money back in your pocket.
1. Educator expenses
It's common practice for teachers to reach into their own wallets to buy classroom supplies, like books, craft materials, and tissues. The good news? You can deduct up to $250 in educator expenses without itemizing, provided you have receipts for the items you bought.
2. IRA contributions
If you contributed to an IRA in 2018 (or are planning to fund your 2018 IRA, which you can still do until this year's April 15 tax filing deadline), and neither you nor your spouse has a retirement plan through work, you're allowed to deduct your contribution on your taxes provided you didn't fund a Roth account. Roth IRA contributions aren't tax-deductible (though Roth accounts offer other benefits that make them worthwhile). On the other hand, contributions you make to a traditional IRA, SEP IRA, or SIMPLE IRA are deductible provided you don't exceed the annual contribution limit for the plan you're saving in.
3. HSA contributions
If you were enrolled in a high-deductible health plan last year and funded a health savings account (HSA), the amount you put in is deductible on your taxes as well. And if you haven't funded your HSA yet, like IRAs, you have until this year's tax deadline to contribute. Just be aware that the maximum you can put in for 2018 is $3,450 if you have individual health coverage, or $6,850 for a family plan. If you're 55 or older, you can put in an extra $1,000 as a catch-up.
4. Self-employment tax
When you work for a company, your employer is responsible for picking up the tab for half of your Social Security and Medicare taxes. When you work for yourself, however, you're liable for that entire bill, and it's not a small sum. For 2018, you were looking at a 12.4% Social Security tax on up to $128,400 of your earnings, and 2.9% on your entire income for Medicare. The good news, however, is that you can deduct half the amount you paid in self-employment tax on your return and get a little relief in the process.
5. Health insurance premiums if you're self-employed
If you worked for yourself last year, paid for health insurance, and didn't have access to a health plan through a spouse's job, then you're allowed to deduct the cost of your premiums on your taxes. You can also deduct the premiums you paid for your family's coverage, provided none of you had access to a health plan elsewhere.
6. Student loan interest
If you had student loans to pay off in 2018, here's some good news: You can deduct up to $2,500 in student loan interest even if you don't itemize. The only catch is that your modified adjusted gross income for the year must be less than $80,000 as a single tax filer, or less than $165,000 if you're married filing jointly. You also can't be married filing separately, and you can't be listed as a dependent on someone else's tax return.
Though paying taxes is certainly a drag, you can ease the pain by taking advantage of the deductions you're entitled to claim. And in these cases, you don't even need to itemize to benefit from some key tax breaks.
