Information from irs.gov
Medical expense deduction: This can be a helpful deduction if you have a high-deductible health insurance and a big-time medical event in one year. You can deduct qualified medical expenses that exceed 10 percent of your adjusted gross income, or AGI, which is your taxable income minus above-the-line deductions.
State and local income or sales tax deduction: taxpayers have been able to deduct state and local sales taxes or state and local income taxes on their federal returns, but not both. For many people, the income tax deduction is usually the higher of the two. But the sales tax deduction option helps residents in states that don’t have income tax. Residents in states with a high sales tax or taxpayers who made a huge purchase subject to a sales tax like a car, boat or RV, may find the sales tax deduction more beneficial than the income tax one.
Mortgage interest deduction: You can deduct any interest you pay on a loan secured by a primary residence or second home, including a mortgage, second mortgage, line of credit or home equity loan. Generally, the deduction is limited to home loans that total $1 million or less. You can typically deduct interest on home equity debt up to $100,000.
Charitable donations deduction: you can deduct up to 50 percent of your AGI for contributions to public charities, colleges and religious groups. The limits are a lower for gifts to other kinds of nonprofits. When it comes to gifts of appreciated property, the limit falls to 30 percent for gifts of appreciated property, such as securities, real estate, art, jewelry or antiques. If your gifts exceed these limits, then the excess deduction can be carried over to the next tax year.
State and local real estate tax deduction: Real estate tax on a home or other property you own is deductible on your federal taxes. To get the deduction, you must have paid the taxes to the assessor in the tax year, including any prepaid taxes for the following year. Real estate taxes paid on foreign property and school taxes based on the property’s value are also deductible. What’s not deductible includes assessments for local improvements, charges for trash collection or library taxes, or fees that aren’t based on the property’s value.
Above-the-line deductions: Also known as adjustments to income, these deductions can be taken without itemizing and they will reduce your AGI, almost always cutting your overall tax bill. Some of the most useful above-the-line deductions are for tuition and fees up to $4,000, contributions to traditional IRAs, student loan interest up to $2,500 and contributions to health savings accounts. Self-employed workers can deduct self-employment tax, contributions to self-employed retirement plans and premiums for self-employed health insurance. Other items that can be deducted above the line include any penalty on early withdrawal of savings and alimony paid to an ex-spouse, among other things.
You may qualify for additional deductions. Be sure to ask your CPA for guidance.
