Tax season is always stressful, but between the government shutdown and the Tax Cuts and Jobs Act going into effect, it's going to be quite an interesting few months.
The standard deduction is $12,000 for individuals (and $24,000 for married couples), although if you have more than that to deduct, you can itemize and potentially decrease your taxable income even more.
Itemized Deductions
- Mortgage Interest: Filers can deduct interest payments on their mortgage loans, up to $750,000.
- State, Local Income Taxes & Property Taxes: Under the new rules, you can only deduct up to $10,000 of state, local and property taxes combined.
- Medical Expenses: Expenses here need to be more than 7.5 percent of your adjusted gross income.
- Investment Interest Expense: As of 2018, you can deduct interest paid on funds you borrowed to buy taxable investments.
- Charitable Giving: You can deduct charitable contributions equaling up to 50 percent of your adjusted gross income.
Non-Itemized Deductions
Even if you take the standard deduction, there still are some things you can deduct to help bring down your taxable income.
- Health Savings Account Deduction
- IRA Contributions
- Educator Expenses: Teachers can deduct up to $250 on supplies they purchased themselves.
- Student Loan Interest: You can deduct either $2,500, or the total amount of interest you shelled out on public or private student loans, whichever is less
- Self-Employment Taxes
- Self-Employed Retirement Contributions
- Self-Employed Insurance Premiums