Tax Deductions, Adjustments to Income
As a taxpayer, you can select to either use the standard deduction or itemized deduction method. The standard deduction is automatically applied regardless of if you had actual deduction spending or not and ranges between $13,000 and $30,000 for federal income tax returns depending on the taxpayer's filing status. With the standard deduction method, you do not have to enter or claim deductions in order to receive the per tax year standard deduction amount. This is compared to itemized deductions where you have to list, claim, and calculate each and every actual amount you spend on qualified deductions on your return - eFile handles this all for you.
- Tax Tip: Unless you have actual qualified deductions that are higher then the default standard deduction amount, you should select the standard deduction method over the itemized deduction method. The eFile Tax App will apply the most advantageous deduction method for you.
Below, find deductions you could claim in addition to the standard deduction or your itemized deductions if you qualify to do so. Save money on taxes by claiming as many tax deductions that apply to you. How do you know which deductions you are eligible to claim? Follow the DIY - Do It Yourself - online tax filing steps on eFile.com and the tax app will help claim all deductions for you.
On this page:
- Definitions and examples of tax deductions, adjustments to income, above-the-line deductions, and more.
- IRS Schedule 1 details: how to report adjustments to income via Schedule 1, Part 2 and reduce your taxes.
- Can you claim the standard deduction while also claiming other deductions? Yes, you can claim above-the-line deduction in addition to the standard deduction or your itemized deductions.
- A detailed list of all current tax year deductions or income adjustments that you can claim this year.
Start your return on eFile.com and enter all your expenses, savings and retirement account contributions, and other deductible information and eFile will get them added to your return. The eFile platform automatically applies the standard deduction to your return, but it will switch over to itemized deductions if you add enough and it benefits you the most. Keep IT simple on eFile.com! IT = Income Taxes.
Deductions You Can Claim
As stated earlier, on your IRS income tax return, you are able to claim the standard deduction or itemize your deductions - you cannot do both. However, there are certain adjustments to income or above-the-line deductions which you can claim in addition to the federal standard deduction via Schedule 1 and report them on your Form 1040.
You may be able to use Schedule 1 to make adjustments to your income if you:
- Paid qualifying educator expenses
- Made money from self-employment and/or made purchases for your business
- Have an alimony settlement dated before 2019
- Contributed to a certain type of savings or retirement account
- Put some money towards student loans including accumulated interest
- Served jury duty and received payment.
Below are all the deductions you can claim in addition to the IRS standard deduction or your total itemized deductions on Schedule A.
If you have qualified expenses as a teacher or educator, deduct up to a certain amount of these expenses on your taxes. Use the linked page for qualified expense examples, limits, and the doubled limit if you are married filing jointly.
Employee expenses are not tax deductible, but you may be able to deduct certain expenses if you are any of the following: Armed Forces reservist, qualifying performing artist, or a fee-basis state or local government official.
Amounts you contribute to your health savings account are deductible from your income each year. Review the annual limits via the linked page.
Report your expenses for a move or recently moved if you are a member of the Armed Forces and relocate due to your position or role in the military.
If you are self-employed, you can deduct half of your business tax via the self-employment tax deduction on Schedule SE - eFile will calculate this for you.
If you set up your own retirement plan, you can deduct the money you contribute to it as a self-employed person - review the limits via the linked page.
If you purchase your own health insurance through your business, deduct your monthly premiums to save money on your insurance.
If you own a business or do contract work, you can deduct your work expenses via Schedule C in addition to your standard deduction or itemized deductions. Save money on your taxes fees: eFileIT
with eFile.com Self-Employed.
Penalty on Early Savings Withdrawal
If you forfeit interest due to premature withdrawal from a savings account such as a high-yield savings account or certificate of deposit (CD), then you can deduct the interest that you would have earned. Use the penalty as reported on your Form 1099-INT or 1099-OID.
Alimony is deductible to the payee only if the divorce agreement was finalized before January 1, 2019. Otherwise, it is not deductible.
Retirement contributions to an individual retirement arrangement are tax deductible under a certain amount - view the linked page.
If you paid some or all of your student loans, you can deduct the student loan interest paid - eFile will help you add this and calculate it on your return.
Medical savings account contributions are able to offset your taxes when you contribute money to the account during the year - report your contributions on your return.
The remaining adjustments are less common, but may be able to be deducted from your income:
- Jury duty pay
- Expenses for income reported on line 8l from renting personal property for profit
- Nontaxable value for Olympic and Paralympic medals or USOC prize money reported on line 8m
- Reforestation amortization and expenses
- Repayment of supplemental unemployment benefits under the Trade Act of 1974
- Contributions to section 501(c)(18)(D) pension plans
- Contributions by certain chaplains to section 403(b) plans
- Attorney fees plus court costs for actions involving certain unlawful discrimination claims
- Attorney fees, court costs you paid which were in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations
- Housing deduction from Form 2555
- Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041)
- Other adjustments - you can enter other qualified adjustments manually, including a type an amount.
To save money on taxes, keep detailed track of all the expenses, contributions, and fees above as you pay them during the year. This way, you can accurately enter them into your eFile account to populate them on your IRS income tax return. Get more details with this simple IRS publication on adjustments to income via Schedule 1.
Qualifications for Income Adjustments or Deductions
Some of the more common adjustments to income have different limits, requirements, or other criteria. Review the information below to plan your taxes before you file them online - review other tax planning tips.
Educator Tax Deduction
If both you and your spouse are educators and have qualified expenses, you can deduct a portion of these expenses that is twice the amount for a single educator. Review qualified education expenses if you are employed at least 900 hours as a teacher, counselor, instructor, principal, or aide in a school teaching grades K-12.
The deductible portion of self-employment taxes via Schedule SE will automatically be calculated for you on eFile.com and reported on Schedule 1. Other common deductions for the self-employed include health insurance, retirement contributions, and general business expenses.
- Self-employed deduction: Any business owner or self-employed person who showed a profit on Schedule C can claim this tax deduction. The deduction is half of your self-employment taxes which is 15.3% - for example, if your business earned $50,000, your self employment tax would be 15.3% of $50,000 = $7,650. Of this, half would be deductible, $3,825.
- Health insurance: If you reported a net profit on Schedule C with a health insurance plan established under your trade or business, then you can deduct up to the earned income minus the self-employment deduction of the business. Qualified insurance can be for the taxpayer, spouse, and your dependents.
- Retirement: Open a self-employed or traditional IRA through your business and you may be able to deduct your contributions to the account.
- Follow the business section in your eFile account and you will be able to add your income, expenses, and deductible payments and get them on your income tax return.
If your divorce was finalized before 2019 and you pay alimony to your ex-spouse each year, then these payments are deductible from your income. If this was settled in 2019 or later, then you can no longer deduct these payments.
Contributions to an IRA
Setting aside money through a traditional individual retirement arrangement can be deductible in the year of the contributions. You may be able to deduct some or all of your contributions if you moved money to a new or existing retirement account and you had earned income or compensation during the year. Review the different limits to claiming the IRA deduction and see if you may qualify for the Saver's Tax Credit.
Confused? Not sure how to claim your deductions? Let eFile do the work for you!
Health Savings Account
Contributions under a certain limit made to an HSA may be deductible on your income taxes. Consider opening an HSA if it is offered by your employer, if you are self-employed, if you are covered by a high-deductible health plan (HDHP), are not enrolled in Medicare, and are not going to be claimed as a dependent.
Both you and your employer (if applicable) can contribute to your HSA - if your employer puts money into your HSA with each paycheck, this is reported on Form W-2. Review criteria, limits, and qualifications for an HSA for more details. Report your W-2 in your eFile account and include all entries from every box with the codes if they are filled in; you can then add additional HSA contributions if you made more on your own. eFile will generate Form 8889 and eFileIT with your return.
Student Loan Interest
Based on your income and filing status, you can deduct a certain amount of student loan interest you paid when make payments towards your student debt. Any interest on a federal or private student loan paid is eligible if it was for you, your spouse, or your dependent for higher education expenses. You may have received a 1098-E showing the amount paid; report student loan interest paid on your taxes.
How to Easily Claim Deductions
Use online tax filing software like the eFile Tax App to apply all tax deductions for you based on a simple questionnaire process. Get the most of of your tax savings: increase your refund or decrease your taxes owed with these above-the-line tax deductions.
TurboTax® is a registered trademark of Intuit, Inc.
H&R Block® is a registered trademark of HRB Innovations, Inc.