The most popular Tax Deductions available.
The Tax Cuts and Jobs Act (TCJA) limited itemized deductions and doubled the standard deduction to entice more taxpayers to skip itemizing – but money-saving deductions still remain for eligible taxpayers. Do you qualify for any of the following nineteen deductions?
1. Charitable Donations – This is one of the few deductions with increased limits due to TCJA. Charitable contributions are now limited to 60% of adjusted gross income (AGI), up from 50%.
2. Mortgage Interest – You can still deduct the interest on $750,000 worth of mortgage debt ($375,000 if married filing separately) for loans taken out after December 15, 2017. Deductions on older mortgages are capped at $1 million of debt. However, mortgage insurance is no longer deductible.
3. Home Equity Loan Interest – Home equity loan interest is now only deductible for funds used for home building or improvements that meet specific criteria. Total mortgage debt, including any home equity loan, must still fall below the $750,000 criteria listed above.
4. Medical/Dental Expenses – Qualifying medical and dental expenses may be deducted up to 7.5% of your AGI. In 2019, the limit reverts back to 10%.
5. Property Taxes – State and local property taxes, including income taxes, sales taxes, and property taxes, are still deductible – but they’ve been limited (see below).
6. State and Local Taxes – State and local income and sales tax deductions, along with property taxes, have been limited to a collective $10,000 by the TCJA ($5,000 if you are married and filing separately).
7. Retirement Plan Contributions – Retirement plan contributions to tax-deferred accounts such as IRAs may be deductible. Roth IRAs are not deductible since they’re funded with post-tax dollars.
8. Self-Employment Taxes – You can deduct 50% of your self-employment taxes (effectively, the amount you pay as employer instead of an employee).
9. Health Savings Account (HSA) Contributions – Contributions to an HSA are tax-deductible up to $3,450 for individuals (employer plus employee) and $6,900 for families.
10. Home Office Deduction – You can deduct certain home office expenses – but only if you’re self-employed. Employees who work from home aren’t eligible.