There are lines and then there are fine lines that can be read to understand better about the available options for deductions on tax returns. Shawn and Penny, a married couple and parents of two children, wanted to make the most of the available options. They are aware that there are other tax deductions you can also deduct, in addition to the standard deductions. So this week we will discuss deductions that are available to be used on your tax return, even if you DO NOT itemize.
There are two ways to reduce your income on your income tax returns. Reducing your income is a way to also reduce the income tax you may be responsible for. The two methods are known as itemizing your deductions and using the standard deduction. Many taxpayers find that they are better off using the standard deduction, rather than itemizing on their tax returns. The standard deduction is a pre-arranged tax deduction the IRS allows taxpayers to claim on their tax returns, based on marital status, among other things. For instance, the standard deduction for 2018 for single taxpayers is $12,000, head of household taxpayers can use $18,000, while married filing joint taxpayers are allowed $24,000 as a standard deduction. This is a reduction of taxable income, before federal income tax is computed. But some deductions are available without having to itemize and are called deductions FOR Adjusted Gross Income (AGI). Deductions for AGI are ALWAYS better than deductions from AGI (which is either a Standard Deduction or Itemized Deductions).
There are other tax deductions you can also deduct in addition to the standard deductions, for example:
Many of these For AGI deductions have limits. Be sure to ask your tax professional what the limits are for this year.
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