25 Simple Tax Deductions You Might Be Missing. No Itemizing Needed.
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When tax season rolls around, many people believe that itemizing is the only way to save money on taxes. But did you know there are numerous deductions you can claim without the hassle of itemizing?
In fact, more than 87% of taxpayers opt for the standard deduction, which still leaves room for plenty of savings. If you’re paying off student loans or contributing to your retirement, these deductions can significantly lower your taxable income and boost your refund.
In this article, you’ll find out 25 easy tax deductions to still save big. Ignoring these deductions means leaving money on the table, something no one wants, especially in today’s economic climate.Â
How much could you save this tax season by skipping itemization?
You might be surprised by how much you can keep in your pocket, and we’d love to hear your thoughts in the comments!
Oh, and of course check with your CPA for your specific situation.
Table of Contents
Student Loan Interest Deduction
The student loan interest deduction allows taxpayers to deduct up to $2,500 in interest paid on qualified student loans. This deduction helps those with qualifying education debt reduce their taxable income.
For 2024, the deduction begins phasing out for incomes over $75,000 (or $155,000 for joint filers). Individuals with MAGI above $90,000 ($185,000 for joint filers) do not qualify.
For those paying off student loans, the interest deduction can help alleviate the financial burden by lowering the amount of income subject to tax.
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Educator Expense Deduction
Teachers and educators can deduct up to $300 in out-of-pocket expenses for classroom supplies. The deduction is available to K-12 educators who work at least 900 hours per school year.
While the deduction remains $300 for 2024, recent pandemic-related legislation briefly raised it to $600. This deduction provides some tax relief for teachers’ personal spending on classroom needs.
While the amount may seem small, it can add up over time and provide valuable tax savings.
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Health Savings Account (HSA) Contributions
Contributions to a Health Savings Account (HSA) are deductible even if you take the standard deduction. HSAs are available to individuals with high-deductible health plans, and the money contributed to the account can be used for qualifying medical expenses.
An HSA provides a triple tax advantage. Contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. This makes it a valuable tool for reducing both medical costs and taxable income.
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IRA Contributions
Traditional IRA contributions can be deducted without itemizing, which helps you save for retirement while also lowering your taxable income. The contribution limit for traditional IRAs in 2024 is $6,500, or $7,500 if you’re 50 or older.
If your income qualifies, this deduction can make a significant impact on your tax bill. Saving for retirement is essential, and with this deduction, you get an immediate tax benefit.
By reducing your taxable income through IRA contributions, you can ensure a more secure financial future while enjoying tax savings today.
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Self-Employment Tax Deduction
Self-employed individuals can deduct half of their self-employment taxes without needing to itemize. The IRS recognizes that self-employed people are responsible for both the employer and employee portions of Social Security and Medicare taxes, so this deduction helps offset that burden.
This deduction is valuable because it reduces your adjusted gross income, which can, in turn, lower your overall tax liability. For freelancers, contractors, and small business owners, this deduction helps ease the financial strain of self-employment taxes.
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Qualified Business Income Deduction
If you’re self-employed or own a pass-through business entity, you may qualify for the Qualified Business Income (QBI) deduction. This allows you to deduct up to 20% of your qualified business income without needing to itemize deductions, but it includes specific requirements.
Eligibility for QBI hinges on income level and business type, with limits applying to higher incomes. Each self-employed taxpayer should review IRS guidelines closely to confirm eligibility.
The QBI deduction is a powerful tool for small business owners, as it can reduce taxable income significantly. By claiming this deduction, business owners can lower their tax liability and potentially reinvest the savings into their operations.
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Adoption Credit
For those who have adopted a child, the adoption credit can provide significant tax relief. This credit helps offset the costs of adoption, and you don’t need to itemize deductions to claim it.
For 2024, the maximum adoption credit is $15,960 per child, which can make a big difference for adoptive families. This credit is designed to alleviate the financial burden of adoption, covering expenses like legal fees, travel, and adoption fees.
It is a valuable benefit that provides much-needed support to families going through the adoption process.
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Mortgage Interest Credit
Homeowners with low incomes may qualify for the mortgage interest credit, which reduces their tax liability based on mortgage interest paid. This is different from the mortgage interest deduction, and you don’t need to itemize to claim it.
This credit helps make homeownership more affordable for low-income families, reducing the overall cost of home loans. It’s a useful benefit for those who qualify, providing valuable tax relief on mortgage payments.
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Retirement Savings Contributions Credit
The Retirement Savings Contributions Credit, also known as the Saver’s Credit, offers a tax credit to low- and moderate-income taxpayers who contribute to a retirement account. This credit can be claimed without itemizing deductions and is worth up to $2,000.
This credit rewards those who save for retirement, providing an extra tax benefit for taking steps to secure your financial future. By reducing your tax liability, the Saver’s Credit encourages more people to save for retirement.
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Military Moving Expenses Deduction
Active-duty military personnel can deduct specific moving expenses when a change of station is required. This deduction is reserved for active-duty service members to ease financial strain during relocations.
Under the Tax Cuts and Jobs Act, most taxpayers lost the moving expenses deduction. Only active-duty members on orders may still claim this benefit without itemizing.
The moving expenses deduction helps ease the financial burden associated with relocating. Costs like travel, lodging, and transporting belongings can add up, and this deduction helps military families cover those expenses.
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Jury Duty Pay Deduction
If you’re required to return your jury duty pay to your employer, you can deduct that amount from your taxable income without itemizing. This deduction helps offset the impact of lost wages while serving on a jury.
While jury duty is a civic responsibility, it can result in financial strain for workers. By offering this deduction, the IRS helps ensure that taxpayers aren’t penalized for fulfilling their civic duties.
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Gambling Loss Deduction
You can deduct gambling losses up to the amount of your winnings without needing to itemize. This deduction applies to both professional and casual gamblers, as long as the losses can be substantiated.
While gambling can be risky, the ability to deduct losses helps mitigate some of the financial risk. Keep records of your wins and losses to take advantage of this deduction if you gamble regularly.
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Alimony Paid Deduction
Taxpayers paying alimony under agreements finalized before 2019 may still deduct those payments. The deduction reduces taxable income, providing tax relief for individuals with qualifying alimony obligations.
This benefit only applies to divorce agreements finalized by December 31, 2018. Alimony payments under newer agreements do not qualify for a deduction, following recent IRS changes.
The deduction helps lower the financial burden for individuals who are making alimony payments. By reducing taxable income, it ensures that the payer receives some financial benefit.
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Casualty and Theft Loss Deduction
Taxpayers can deduct casualty and theft losses if they occur in a federally declared disaster area. For losses outside of these areas, you must itemize deductions to claim them, according to the Tax Cuts and Jobs Act.
If you’ve suffered property damage in a federally declared disaster, this deduction can provide some financial relief by reducing your taxable income and helping offset the costs of recovering from such events.
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Health Insurance Premiums for the Self-Employed
Self-employed individuals can deduct health insurance premiums without needing to itemize. This deduction applies to premiums paid for medical, dental, and qualified long-term care coverage.
This is particularly valuable for entrepreneurs and freelancers who pay for their own health insurance. It reduces their taxable income, which can significantly lower their overall tax liability.
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Educator Professional Development Expenses
In addition to supplies, teachers can deduct expenses for professional development courses. This deduction applies to continuing education necessary to maintain certification or advance teaching skills.
While the amount may not seem large, it can still provide savings. Educators benefit by reducing taxable income while investing in their careers.
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Penalty on Early Withdrawal of Savings
If you withdraw money early from a certificate of deposit (CD) or savings account, you may face a penalty. Fortunately, this penalty is tax-deductible, even if you don’t itemize.
While the penalty reduces your savings, the deduction helps to offset that loss. This provides some relief for those needing early access to their funds.
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Lifetime Learning Credit
The Lifetime Learning Credit helps taxpayers offset the cost of higher education, covering tuition and certain fees. This credit doesn’t require itemizing and offers up to $2,000 annually per household.
Although, eligibility for this credit is income-restricted, phasing out for higher MAGI levels. Taxpayers should review their income levels to determine if they qualify to claim it fully.
This credit benefits taxpayers who take courses to improve their skills. It’s a useful option for individuals investing in their education, especially for career advancement.
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American Opportunity Tax Credit
The American Opportunity Tax Credit (AOTC) offers a tax credit for qualified education expenses. The credit is available for the first four years of post-secondary education and does not require itemizing.
It can cover up to $2,500 per eligible student, offering substantial savings. This credit is a great tool for parents or students to reduce education costs and tax liabilities.
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Military Reservist Travel Expenses
Members of the National Guard and military reserves can deduct travel expenses for drill training. This deduction is available even if you don’t itemize and covers lodging, meals, and transportation.
Service members benefit by reducing the costs associated with required training travel. It helps them manage the financial burden of fulfilling their service duties.
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Contributions to SEP IRA
Self-employed individuals can contribute to a Simplified Employee Pension (SEP) IRA and deduct those contributions without itemizing. Contributions are tax-deductible, reducing taxable income while securing retirement savings.
This deduction provides significant tax benefits for small business owners and freelancers. It offers a way to build retirement savings while enjoying immediate tax relief.
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Health Insurance Premium Tax Credit
Low- and moderate-income individuals purchasing health insurance through the Marketplace may qualify for a premium tax credit. This credit reduces monthly premiums and can be claimed without itemizing.
The credit helps make health insurance more affordable for those who qualify. It provides immediate financial assistance by lowering the out-of-pocket cost of health insurance.
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Union Dues Deduction for Certain Employees
Employees in specific industries, such as education and transportation, may deduct union dues without itemizing. These deductions help offset the cost of union membership.
Union members benefit by lowering taxable income, which can reduce the overall tax burden. This deduction supports workers in unionized roles who face out-of-pocket dues.
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Tax-Free Employer Assistance for Education
If your employer provides tuition reimbursement, you can receive up to $5,250 in tax-free assistance annually. This benefit doesn’t require itemizing and helps cover the cost of education.
It’s a valuable opportunity for employees to further their education without increasing their taxable income. Employers also benefit by supporting staff development without creating additional tax liabilities for their workers.
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Take These Tax Savings to the Bank
Maximizing your tax savings doesn’t have to be complicated. By claiming these deductions without itemizing, you can reduce your taxable income and keep more money in your pocket.
Starting with paying off student loans to contributing to your retirement, these tax benefits offer a simple way to save. Don’t let the idea of itemizing stop you from making the most of your tax return.
With careful planning, you can still enjoy valuable deductions and a bigger refund this tax season. Be sure to review these options with your CPA before you file to see how much you could save!
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