Above-the-Line Deductions You Can Take Without Itemizing

Even if you don't itemize, you may be able to take above-the-line deductions.

There are many personal tax deductions you can take only if you itemize your deductions. This requires you to list the amount of each deduction on IRS Schedule A and file it with your tax return. Itemized deductions include many of the most popular tax deductions such as home mortgage interest, medical expenses, charitable contributions, and state and local taxes.

You should itemize if your total itemized deductions are worth more than the standard deduction. Because the Tax Cuts and Jobs Act (“TCJA”) roughly doubled the standard deduction starting in 2018, fewer taxpayers than ever will itemize. Starting in 2018, it’s expected that no more than 5% of all taxpayers will itemize, down from about 30% in prior years. Check the IRS website for annual inflation-adjusted standard deduction amounts.

Above-the-Line Deductions

If you don't itemize you can forget about deducting things like charitable contributions. But there are still some tax deductions - known as above-the-line deductions - you can take without itemizing. These can be found on the front of your federal Form 1040 in the Adjusted Gross Income section. Technically speaking, these are not deductions at all, but adjustments to income, even though they are also called above-the-line deductions. But, just like a deduction, they reduce your taxable income.

The TCJA eliminated the above-the-line deduction for employee moving expenses during 2018 through 2025. This deduction is scheduled to return in 2026. The domestic production activities deduction was also eliminated.

The above-the-line deductions that remain under the TCJA include the following:

Self-employed health insurance. People who are self-employed can deduct health insurance premiums up to the amount of the profit from the business.

Health savings account contributions. You can deduct Health Savings Account (HSA) contributions you make with personal funds.

Retirement plan contributions by self-employed taxpayers. These include annual contributions made by self-employed people to their retirement plans, such as SEP-IRAs, SIMPLE IRAs, Keogh plans, and solo 401(k) plans.

IRA contributions. Contributions to IRA accounts (subject to annual threshold limits) may be deductible, depending on your income.

50% of self-employment taxes. If you’re self-employed, you can deduct half of the 12.4% Social Security tax on net self-employment income, up to an annual ceiling, and a 2.9% Medicare tax on all net self-employment income.

Penalty on early savings withdrawals. You can deduct from your income penalties you had to pay to banks and other financial institutions because you withdrew your savings early from certificates of deposit or similar accounts.

Student loan interest. Up to $2,500 of student loan interest is deductible from your gross income provided that your AGI—before subtracting any deduction for student loan interest—is below a ceiling amount.

Tuition and fees. Depending on your income, you may deduct up to $4,000 in higher education tuition and fees you pay for yourself, your spouse, or a dependent. However, this deduction is not allowed if the American Opportunity tax credit or Lifetime Learning Credit is claimed.

Alimony. You can also subtract amounts you paid in alimony, that is, a court-ordered payment to a separated spouse or divorced ex-spouse. You can’t include child support payments. For more details, see IRS Publication 504, Divorced or Separated Individuals. The TCJA eliminates this deduction starting in 2019 for any divorce or separation agreement executed after Dec. 31, 2018, or executed before that date but modified after it (if the modification expressly provides that the TCJA applies).

Moving Expenses for Armed Forces members. Members of the Armed Forces on active duty (or their spouse or dependents) who move pursuant to a military order and incident to a permanent change of station may deduct their moving and storage expenses.

Be sure to keep good records of all such expenses, even if you don’t itemize.

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