Want a Bigger Refund? Check Out Above-the-Line Deductions

tax tips, tax breaks | January 03, 2019 | By Susannah McQuitty

A tablet open to 1040.com to file taxes online

Standard deductions, itemized deductions, and above-the-line deductions are different kinds of tax breaks to help taxpayers save money when they file their returns. Deductions reduce your taxable income, so you don’t have to pay taxes on all the money you earned.

Tax reform affected limits, amounts, and types of deductions, but for the most part the way they function stayed the same. That’s great news too—because the standard deduction has been almost doubled this year, and above-the-line deductions stack on top of that.

How do deductions work?

There are two ways to claim the majority of your deductions: Either claim the standard deduction, which is a set amount determined by your filing status, or list your individual deductions and add them up for a grand total—also known as itemizing deductions.

It’s much easier to claim the standard deduction, but if you have enough itemized deductions, you want to take the time to list them and boost your refund.

1040.com’s blog open on a laptop in a coffee shop

So what are above-the-line deductions?

Above-the-line deductions can be claimed regardless of whether you choose the standard deduction or itemized deductions. As the simplest of the three deduction types, above-the-line deductions are really just stand-alone adjustments. These deductions include items such as:

  • Educator expenses—Up to $250 of qualifying expenses paid by teachers can be deducted.
  • Student loan interest—If you’re paying back student loans, you can deduct your interest payments from your taxable income.
  • IRA contributions—If you have a qualified IRA, portions of the amount you contribute can be deducted from income.
  • Self-employment tax deduction—If you pay self-employment tax, you can generally deduct half of it, which helps offset paying the full amount of Medicare and Social Security taxes on your own.

Here’s why that’s good news this year: Tax reform gave the standard deduction a huge boost with the Tax Cuts and Jobs Act of 2017. More people can get bigger refunds without the hassle of itemizing deductions, and they can still add above-the-line deductions on top of that. Not bad!

When you file with 1040.com, we’ll simply ask you a few questions to figure out which deductions you should claim based on your filing status and financial situation. You’ll get as many tax breaks as possible, whether from standard deductions, itemized deductions, or above-the-line deductions, as easily as possible.


Ready to file your taxes? Start Free!