Yesterday, we advised you to start preparing for your 2023 tax filing.  Today, we’ll talk about deductions you can take that are not included on Schedule A, Itemized deductions.  These are “above the line” deductions that are afforded you, even if you don’t itemiae.

Are you a teacher, a counselor, an aide, or a principal?  Well, you can deduct a paltry amount (probably much less than what you spend to help your charges) of $ 300.  But, that doesn’t mean you should skip it.  It’s your’ money! And, if you are couple that both operate in this category, you can deduct $600 ($300 for each of you0.  You file this above the line deduction on Schedule 1, line 11.

What about those of you how have a high deductible health care plan (HDHP)?  If you do- and funded a health savings account, you can deduct those withdrawal amounts from your income, as long as you have the receipts for those expenditures.  These are listed on Schedule 1, also- but line 13.  You also need to file Form 8889.   The limits on HAS contributions are $ 3650 for singles and $ 7300 for marrieds filing jointly.  (OH, if you are over 55, like me, then you can a higher limit- add $ 1000 to those numbers.)

Are you a member of the military?  Well, then you are one of the few that can still deduct moving expenses. (The Tax Cut and Jobs Act (sic) eliminated this deduction for regular taxpayers.) The move must be related to a permanent change of duty station, as well.  These are also listed on Schedule 1, line 14- plus you must fill out Form 3903.

Did you pull money out of  a CD or time deposit account? Well, your bank penalty may be deductible. The amount of the penalty is listed on Schedule 1, line 18.

Here’s another wrinkle.  Are you a member of the National Guard or Reserves?  OR, a qualified performing artist, a state or local government official, or an employee with disabilities?  Well, expenses related to those activities may be deductible.  Those associates with the military can deduct expenses that were incurred 100 miles or more from your home.  Government employees that are fee-based can deduct those expenses.  And, the disabled get to deduct the costs of attendant care where you work. These deductions are listed on Schedule 1, line12.  Don’t forget to include Form 2106, either.

Are you a gig worker?  A solopreneur?  Or simply a self-employed individual?  Well, then those Social Security and Medicare Taxes (15.3% of your net income that you were assessed on Schedule C, are partially deductible above the line.  Half that total needs to be listed on Schedule 1, line 15, along with Schedule SE.

Along those same lines, do you have a self-employment retirement account? If you have a SEP-IRA or a SIMPLE IRA, contributions can be deductible. The lesser of $ 61K or 25% of your compensation for an SEP-IRA can be deducted. The limits on a SIMPLE IRA are lower at $ 14000.   These amounts are listed on Schedule 1, line 16.

By the way, folks who contribute to their IRA can deduct that money. (One can contribute to their IRA until 15 April 2024 – or the date of tax filing- for the 2023 income tax deduction.)  The limits are $6500 for those under 50 and $ 7500 for those who passed the Rubicon.  However, if you are covered by a work-based retirement plan or your income exceeds certain levels, this deduction is limited.  Otherwise list those contributions on Line 20 of Schedule 1.

Let us not forget about the self-employed health insurance deduction.  Self-employed folks can deduct the costs of their health insurance from their income. This includes long-term care   This includes long-term care premiums, as well as dental insurance- and if you are over 65 Medicare insurance as well.  These claims are listed on Schedule 1, line 17 of Form 1040.

Here’s a deduction that is fading fast from our choices.  Only if you have been divorced or legally separated by 31 December 2018 or earlier, can you deduct the cost of alimony. (The recipients social security number must also be listed.)   Also, if the payments were modified after that date,  they are no longer deductible.  (Of course, the spouse that received the funds must include them in their income.)  The deductions are listed on Line 19a of Schedule 1.

And, now for a sore spot.   Student interest payments are now back- so the interest payments you made in 2023 are partially deductible.  UP to $ 2500 can be so listed (there are income [$85K for singles and $170K for marrieds filing jointly]  and filing status limits [married filing separately are barred from deducting student interest]).   Otherwise, file these amounts on Line 21 of Schedule 1.

If you find these confusing, remember, we are just a call away (or a secure upload away).  We’ll make sure you pay the lowest amount of taxes required by law.

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