CHICAGO – NOVEMBER 1: Current federal tax forms are distributed at the offices of the Internal … More
When you file your taxes, one of the biggest decisions is whether you should claim the standard deduction or go through the chore of itemizing your deductions.
With the standard deduction of $15,000 for individuals and $30,000 for married couples filing jointly, itemizing requires a significant sum of deductions to make it worth it.
But did you know there are “above-the-line” deductions that you can claim even if you claim the standard deduction?
Many of these deductions are claimed on Schedule 1 of your Form 1040, which can be a guide to finding these above-the-line deductions.
Here are a few of the more uncommon ones:
1. Early Withdrawal Penalties on Bank Deposits
If you had to withdraw money early from a certificate of deposit (CD), you likely paid a penalty depending on the terms of the CD. For many CDs, you pay the equivalent of 6-months or more of interest back to the bank if you have to access your funds early.
Fortunately, this is deductible on Line 18 – Penalty on early withdrawal of savings.
2. Student Loan Interest
If you paid student loan interest, you could get a tax break on up to $2,500 of payments as long as you qualify. There are income restrictions. You do not qualify if you have income over $80,000 for single filers and $165,000 for those married filing jointly.
This can be found one Line 21 – Student loan interest deduction.
4. Alimony for Divorces Before 2019
If you were divorced before the start of 2019, your alimony payments are deductible from your income on Schedule 1 of your Form 1040, Line 19a – Alimony paid. If your agreement was established amended in or after 2019, unfortunately it will no longer be deductible.
5. Expenses for Educators
If you are a teacher, you can deduct up to $300 in unreimbursed expenses spent in your classroom. You must have worked at least 900 hours at a qualifying elementary or secondary school.
This can be found on Line 11 – Educator expenses.
6. Active-Duty: Moving Expenses
If you are an active-duty service member and had qualifying moving expenses that were not reimbursed, you can claim them on Line 14 – Moving expenses for members of the Armed Forces.
It covers household items, housing, storage and travel but does not include meals.