Tax deductions

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The federal government offers numerous tax deductions (for example, for home mortgage interest, business expenses, some local tax expenses, and medical expenses).  Not all deductions have the same impact, depending on how they relate to your Adjusted Gross Income (AGI).  Your AGI is used to determine many of your tax breaks (lower income means more breaks) and is the starting point for calculating your financial aid eligibility. Some deductions are taken “above the line” and some are taken “below the line.”  Those taken above the line are referred to as deductions “for" AGI; they reduce your AGI.   Your standard and itemized deductions taken below the line are referred to as deductions “from" AGI; your AGI is computed before they are taken into account.

 

Two common deductions for independent students are the tuition and fees deduction and student loan interest deduction.  Both of these are deducted “for" AGI.

The deductions allowed "for" AGI," are listed in the “Adjusted Gross Income” section of the 1040 form.  Depending on your situation, you may be eligible for one or several of these deductions.

There are two methods for taking deductions "from" AGI: itemized and standard.  You are allowed to take the one that is most beneficial to you.  

Standard deduction: An amount that the IRS sets each year that may be deducted from AGI by anyone who declines to itemize deductions.  The amount is based on your filing status (single, married-joint, married-separate, or head of household).

Standard Deduction Chart for Most People* 2016
 
If your Filing Status Is...Your Standard Deduction Is:
Single or Married filing separately$6,300

Married filing jointly or Qualifying
widow(er) with dependent child

$12,600
Head of household

$9,300

*If you are claimed as a dependent, your standard deduction is lower.  If you are blind and/or over age 65, your standard deduction will be higher.

Itemized deductions: It might be better to itemize your deductions rather than to take the standard deduction if any of the following apply to you:

  • you are not able to use the standard deduction;
  • you have incurred large uninsured medical and dental expenses;
  • you have paid interest and taxes on your home;
  • you have large unreimbursed employee business expenses;
  • you have had a large uninsured casualty or theft losses; or
  • you have made large charitable contributions.

Itemized Deductions

Here is a complete list of itemizable deductions, along with links to IRS pages explaining them.

 

 

IMPORTANT NOTE: The information provided to you on this page is limited in scope and should not be your only resource for completing your tax returns. We recommend you seek advice from a licensed tax professional.