Tax Deductions

If you’ve given up itemizing deductions, you’re not alone. These days over half of all taxpayers find they’re better off using the standard deduction. But even if you take the standard deduction, you can also deduct some individual expenses. Consider the following.

1. IRA and HSA contributions - you can deduct up to $4,000 in contributions to a traditional IRA this year. That increases to $5,000 if you’re age 50 or older. Income limitations may apply in some cases. You can’t deduct contributions to Roth IRAs.

2. Health Savings Accounts (HSAs) are IRA-like accounts set up in conjunction with a high-deductible health insurance policy. You make annual deductible contributions to your HSA. Contributions are invested and grow tax-free, and you're allowed to withdraw money in the account tax-free to pay for your unreimbursed medical expenses.

3.Student loan interest and tuition fees - deduct up to $2,500 interest on student loans for yourself, your spouse, and your dependents. You can also deduct up to $4,000 of tuition and fees for qualified higher education courses. Income limitations apply, and you must coordinate these deductions with other education tax breaks.

4.Self-employment deductions - if you’re self employed, you can generally deduct the cost of health insurance premiums, retirement plan contributions, and one-half of self-employment taxes.

5.Other deductions - don’t overlook deductions for alimony you pay, certain moving expenses, and early withdrawal penalties. Teachers can deduct up to $250 for classroom supplies that they buy themselves.

Contact us for more information on these and other deductions that could cut your tax bill.