Taxes | March 1, 2019

6 Deductions You May Be Able to Take Even If You Don’t Itemize

The Tax Cuts and Jobs Act nearly doubled the standard deduction. As a result, 28.5 million fewer Americans are expected to itemize for 2018.1

That said, even taxpayers who don’t itemize for 2018 may be eligible for one or more above-the-line deductions—that is, expenses that can be subtracted from your gross income before you calculate your taxable income.

For savers:

  • Traditional Individual Retirement Account (IRA) contributions: Depending on your situation, you may be able to deduct some or all of your contributions to a traditional IRA (see chart, below)—up to the annual maximum of $5,500 ($6,000 in 2019), or $6,500 for those ages 50 and older ($7,000 in 2019).

 

 

Full deduction allowed if:

Partial deduction allowed if:

Single

  • You earned less than $63,000 ($64,000 in 2019) or
  • You were not covered by an employer-sponsored retirement plan
  • You were covered by an employer-sponsored retirement plan and you earned between $63,000 and $73,000 (between $64,000 and $74,000 in 2019)

Married filing jointly*

  • You earned less than $101,000 ($103,000 in 2019) or
  • Neither you nor your spouse was covered by an employer-sponsored retirement plan
  • Both you and your spouse were covered by an employer-sponsored retirement plan and you earned between $101,000 and $121,000 (between $103,000 and $123,000 in 2019) or
  • Only your spouse was covered by an employer-sponsored retirement plan and you earned between $189,000 and $199,000 (between $193,000 and $203,000 in 2019)

*Income limits are for combined earnings.

 

  • Health Savings Account (HSA) contributions: Regardless of income, HSA contributions are fully deductible up to $3,450 for individuals ($3,500 in 2019) and $6,900 for families ($7,000 in 2019), plus an extra $1,000 for those ages 55 and older.

For the self-employed:

  • Health insurance premiums: Individuals can deduct 100% of their health insurance premiums, up to the total annual profit from the business. However, those who have multiple businesses must choose only one business when determining deductibility.
  • Retirement plan contributions: Annual contributions to SEP IRAs, SIMPLE IRAs and solo 401(k) plans are generally 100% deductible up to the contribution limit. Plan limits vary, however, so be sure to consult a tax advisor for help determining deductibility.
  • Self-employment tax: Those who are self-employed must pay the employee and employer portions of their Social Security and Medicare taxes (12.4% and 2.9%, respectively). However, the IRS allows you to deduct 50% of the total from your personal tax return.

For students:

  • Student loan interest: Individuals can deduct up to $2,500 in student loan interest, provided their modified adjusted gross income is less than $65,000 for single filers or $135,000 for married couples, at which points the deduction begins to phase out.

You may be entitled to other above-the-line deductions not listed here, so be sure to check with a tax professional before filing your return.

1Tables Related to the Federal Tax System as in Effect 2017 Through 2026, United States Congress Joint Committee on Taxation, 04/23/2018.

What You Can Do Next

    • Read more tax tips from Schwab’s experts.
    • Ready to get a jump-start on your taxes? Schwab clients can log in to download 2018 tax forms.