Terms like “tax write-off” and tax deduction get bandied about a lot. Unfortunately, there is also much misinformation and hype. This article will try to provide clarification. The goal is to help you determine whether to take the standard deduction or itemize your deductions. I’ll also discuss some other common deductions and link to resources.
What is Tax Deduction?
A tax deduction reduces taxable income. For individual tax filers, what can be deducted, is relatively straightforward. Businesses expense deductions can be a bit more nuanced.
Who is Eligible for Work Expense Deductions?
Generally, an individual who is an employee cannot deduct work expenses. There are some special exceptions listed below:
- Educator Expense Deduction: There is an educator expense deduction for K-12 educators. The deduction is up to $300 for unreimbursed qualified expenses. Qualified expenses include professional development, equipment and teaching supplies. The educator must have worked at least 900 hours. Find out more from IRS “Topic no. 458: Educator expense deduction,” https://www.irs.gov/taxtopics/tc458 .
- Employee Business Deduction: Reservists, performing artists, and fee-basis government officials can deduct certain business expenses. Find out more by referring to “About Form 2106, Employee Business Deduction” at https://www.irs.gov/instructions/i2106 .
Self-employed individuals can deduct business expenses that are ordinary and reasonable for their business. Schedule -C (Form 1040) must be filed to deduct expenses. More information can be found in “Profit or Loss from Business” https://www.irs.gov/forms-pubs/about-schedule-c-form-1040 .
Standard vs. Itemized Deductions
Tax filers can either take the standard deduction or itemize deductions. The first step is to find the current tax year’s standard deduction amount and compare that to what you can itemize. Each filing status has specific deduction amounts that are adjusted annually for inflation.
2024 Standard Deduction Amounts
| Filing Status | Deduction Amount |
| Single | $14,600.00 |
| Married Filing Jointly | $29,200.00 |
| Head of Household | $21,900.00 |
| Additional Amount for Married Seniors | $1,550.00 |
| Additional Amount for Unmarried Seniors | $1,950.00 |
Everything that an individual can itemize is listed on Schedule A (Form 1040) https://www.irs.gov/forms-pubs/about-schedule-a-form-1040
Itemized Deductions: Additional Points to Consider
- Unreimbursed medical expenses can be itemized to the extent that they exceed 7.5% of Adjusted Gross Income (AGI). For example: Max has an AGI of $50,000 and unreimbursed medical expenses total $4,000. Max can itemize $250 worth of medical expenses. Health insurance premiums paid with pre-tax dollars are not eligible for itemization.
- State and Local Taxes (SALT): The maximum that can be deducted in this category is $10,000. A tax filer can deduct either state income taxes or general sales taxes. Since Florida does not have a state income tax, the choice is set. In addition, property taxes can be itemized
- Interest Deduction: Mortgage interest can be itemized. Interest paid for other things like credit cards or auto loans cannot be itemized.
- Other Itemized Deductions: Gambling losses can be itemized to the extent of gambling winnings.
Additional Deductions (Adjustments to Income)
In addition to taking the standard deduction or itemizing your deductions, there are some additional things that can be deducted. The IRS calls these “adjustments to income” and those that reduce taxable income are listed on page 2 of the Schedule 1 form https://www.irs.gov/pub/irs-pdf/f1040s1.pdf.
Some of the most common are student loan interest, contributions to a Traditional Individual Retirement Account, contributions to a Health Savings Account (HSA), penalties for early withdrawal from a savings account, and alimony if the divorce agreements was executed prior to 2019.
Save Time and Money
Understanding the rules can save you both time and money. By familiarizing yourself with the available deductions and the criteria for each, you can streamline your tax filing process and potentially reduce your taxable income. This proactive approach not only simplifies your annual tax preparations but also contributes to better financial planning.
*ChatGPT was used in this article to help with grammar, structure, and readability.
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