Q: Is there a way to tell whether I have missed deductions that could have lowered my income taxes?
A: Yes. Two excellent places to look are Schedule 1 and Schedule 1A of Form 1040.
Many taxpayers overlook valuable deductions listed there because they focus only on itemized deductions. But these schedules contain several “above-the-line” deductions that can reduce taxable income even if you do not itemize.
Here are a few important examples:
From Schedule 1
Self-employed health insurance deduction. If you have net self-employment income, you may be able to deduct 100 percent of qualifying health, dental, vision and long-term care insurance premiums.
Health Savings Account deduction. Personal contributions to a qualifying Health Savings Account are generally deductible up to annual limits. HSAs offer tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses.
From Schedule 1A
“No tax on overtime” deduction. Recent tax law changes added deductions for qualifying overtime income – generally up to $12,500 for single taxpayers and $25,000 for married couples, subject to income limits.
“No tax on tips” deduction. Eligible taxpayers may also deduct up to $25,000 of qualifying tip income under current law.
Enhanced deduction for qualifying seniors. Recent law changes also expanded deductions available to many older taxpayers.
The bottom line: Schedule 1 and Schedule 1A can be two of the fastest ways to identify overlooked tax-saving opportunities. And if you later discover you missed a deduction, you may still be able to amend your return and recover a refund – provided you act within IRS amendment time limits.
Send questions about your taxes to Vincent Hicks, a CPA based in Cambridge who has more than 20 years of experience, at vincent@hickscpasolutions.com. You can call Hicks at (859) 553-0788.
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