Can’t itemize? You can still claim some expenses on your 2016 federal income tax return. Here’s how you can benefit.
* IRA and HSA contributions
If you made a contribution to your traditional IRA for 2016, or if you plan to make a 2016 contribution by April 18, 2017, you may qualify to deduct up to the maximum contribution amount of $5,500 ($6,500 if you’re age 50 or older). Income limitations apply in some cases, and you can’t deduct contributions to Roth IRAs.
Health Savings Accounts (HSAs) are IRA-like accounts set up in conjunction with a high-deductible health insurance policy. The annual contributions you make to your HSA are deductible. Contributions are invested and grow on a tax-deferred basis, and you’re allowed to withdraw money in the account tax-free to pay for your unreimbursed medical expenses. For 2016, you can deduct up to the contribution limit of $3,350 if you’re filing single and $6,750 when you’re married filing jointly. You may also be able to deduct an additional $1,000 if you were age 55 or older and made a catch-up contribution to your HSA.
* Student loan interest and tuition fees
Deduct up to $2,500 of interest on student loans for yourself, your spouse, and your dependents on your 2016 return. For 2016 returns, you can also deduct up to $4,000 of tuition and fees for qualified higher education courses. Income limitations apply, and you must coordinate these deductions with other education tax breaks.
* Self-employment deductions
If you’re self-employed, you can generally deduct the cost of health insurance premiums, retirement plan contributions, and one-half of self-employment taxes.
* Other deductions
Alimony you pay, certain moving expenses, and early savings withdrawal penalties are also deductible on your 2016 return, even if you don’t itemize. Teachers can deduct up to $250 for classroom supplies purchased out-of-pocket in 2016.
Also keep in mind that Colorado offers a charitable deduction for contributions made even if you do not itemize on your federal return. So don’t forget to give your CPA your charitable receipts even if no Schedule A will be prepared.
Contact our office for more information on these and other costs you may be able to deduct on your 2016 tax return.