Don't Mess With Taxes

The standard tax deduction is used by most filers.

The amounts are substantial, thanks to the increases of the Tax Cuts and Jobs Act (TCJA) of 2017. Plus, it’s easy to claim. The standard amount for each filing status is listed directly on Form 1040.

See more tax forms and more about them at Tax Forms 2024 and Tax Forms 2025.
 

But that doesn’t mean you should stop looking for deductions. There are two dozen that are available to qualifying taxpayers, regardless of whether you take the standard claim or itemize.

Here’s a look at these 24 tax write-offs that, since the tax form changes prompted by the TCJA’s enactment, are found on Form 1040 Schedule 1.

Above-the-line deductions: These tax breaks officially are known as Adjustments to Income. They are listed in Part II of Schedule 1, which is on the reverse, page 2 side of the schedule if you’re looking at a paper form.

Once you add up all the adjustments, that total is transferred to line 10 of your 1040. By subtracting the adjustments amount from your total income, you get your adjusted gross income (AGI).

Before tax reform, AGI was the last line of the 1040 form’s first page, so the adjustments were nicknamed above-the-line deductions.

While that form position is no longer true, the moniker has held, at least in the tax community. So the adjustments, shown in the Schedule 1 screenshot below, are still referred to as above-the-line deductions.

See more tax forms and more about them at Tax Forms 2024 and Tax Forms 2025.
 

And here's a bit on what they entail.

Educator expenses (line 11): Eligible educators (more on this in a minute) can deduct some qualified unreimbursed classroom expenses paid out-of-pocket. The amount is adjusted annually for inflation, and on 2024 returns is worth $300 per eligible educator.

If you and your spouse are filing jointly and both of you qualify for this tax break, the maximum deduction is $600. However, neither spouse can deduct more than $300 of his or her qualified expenses here.

So if you're an eligible educator — the IRS says this includes kindergarten through grade 12 teachers, instructors, counselors, principals, or aides who worked in a school for at least 900 hours during a school year — don't miss out on this deduction. One other note: home school parents don't qualify for this deduction.

Certain business expenses (line 12): Don't get too excited thinking this might help reduce your business tax bill. Schedule 1 notes that these write-offs are limited to folks in special job categories, specifically military reservists, performing artists and fee-basis government officials. Also, reserve military personnel can only use this for costs incurred when they travel more than 100 miles from home to perform services as a National Guard or other armed forces reserve member. If you drove to these duties in 2024, those miles can be counted at 67 cents per mile. You also can add in parking, fees, and tolls. All taxpayers who take this deduction also will need to fill out Form 2106.

Health savings account deduction (line 13): Here you can write off your contributions to one of these medical coverage plans, commonly referred to as HSAs. However, you'll need more paperwork here, too. You must also file Form 8889.

Moving expenses for members of the Armed Forces (line 14): Folks who've claimed this tax break in the past probably noticed the added reference on this line's description. It previously was shown only as moving expenses. But the TCJA changed that. Now relocation costs are limited to military personnel who are on active duty and who move pursuant to a military order related to a permanent change of station. These relocating U.S. Armed forces members also will have to fill out Form 3903 to detail their eligible costs, the total of which go here.

Self-employment tax (line 15): If you worked for yourself, either as the full-time boss or as gigs to bring in some extra spending money, you likely had to pay self-employment tax. Half of that amount can be subtracted here. You'll have to include your Schedule SE, too.

Self-employed SEP, SIMPLE, and qualified plans (line 16): Staying in the be-your-own-boss vein, if you were able to contribute to a qualified self-employment retirement plan, note that amount here.

Self-employed health insurance deduction (line 17): One more break for the independent worker. If you paid for your own medical policy, those premiums are fully deductible here. The insurance also can cover your child who was younger than 27 at the end of 2024, even if your son or daughter wasn't your dependent. If you don't use a tax pro or tax software, there's a worksheet for the self-employed insurance deduction in the Form 1040 Schedule 1 instructions (page 89).

Penalty on early withdrawal of savings (line 18): If you had to cash in a CD or other savings plan and paid a price for getting your money from your bank, you can write off that fee here. You should have received a Form 1099-INT or Form 1099-OID detailing the early-withdrawal penalty amount.

Alimony paid (line 19): The TCJA also changed the tax treatment of alimony for ex-spouses who pay and receive this money. But its changes don't affect divorces that were granted before the tax law took effect. Those distinctions affect the entries on this three-part line.

Under the TCJA, the deduction for alimony payments — the amount entered on line 19a — will remain in effect for folks with divorce agreements finalized by a court and/or a formal divorce decree issued before the end of 2018. That's why the date you enter on line 19c is so important.

As for the former spouse getting alimony, if your marital status change was on or after the TCJA's Jan. 1, 2019, effective date, then you don't owe tax on the spousal payments you get. If, however, it was before the law changed, you still owe Uncle Sam. That's why line 19b wants your Social Security number, so the IRS can double check that you report it as income.

IRA deduction (line 20): If you have a traditional IRA, you might be able to deduct some or all of your contribution. This Schedule 1 deduction depends on many variables, such as income and workplace retirement plans, both for you and, if you're married and file jointly, your spouse. Again, there more, including a worksheet, on pages 91 through 93 of the Form 1040 instructions.

Student loan interest deduction (line 21): You can write off up to $2,500 in interest on your school debt here. Yes, there's yet another worksheet (page 94) to make sure you qualify — there are AGI determined earning limits — and figure how much you can enter on this line.

Reserved for future use (line 22): In prior tax years, this line was the tuition and fees adjustment. However, lawmakers decided to eliminate this deduction (as part of the Taxpayer Certainty and Disaster Tax Relief Act of 2020) and make up for it by making the Lifetime Learning Credit available to more individuals.

The change actually is a better deal, as a tax credit if more valuable than a deduction because a credit directly reduces tax liability dollar-for-dollar. So be sure to check out that educational tax break (and others) if you paid schooling costs for yourself, your spouse, or dependents. As for Form 1040, if another adjustment to income is approved by Congress for future filings, it will be slotted here.

Archer MSA deduction (line 23): An Archer MSA, short for medical savings account, was available only to certain self-employed people and small businesses. I say was because the Archer MSA program expired on Dec. 31, 2007. No new accounts were allowed after that date, but Archer MSAs established before then can continue to be used and receive contributions. The contributions can be claimed here, along with the filing of Form 8853.

But wait, there's more! Line 24, shown in the screenshot below, offers a dozen more changes to reduce your income as, what else, additional adjustments to income.

See more tax forms and more about them at Tax Forms 2024 and Tax Forms 2025.
 

The 12 additional income adjustments as alphabetic sublines of line 24 are:

1. Jury duty pay if you gave the pay to your employer because your employer paid your salary while you served on the jury.
2. Deductible expenses related to income reported on line 8l (that's in Part 1 of Schedule 1's Additional Income section) from the rental of personal property engaged in for profit.
3. Nontaxable amount of the value of Olympic and Paralympic medals and USOC prize money reported on line 8m (again, in Part 1's Additional Income section).
4. Reforestation amortization and expenses (see instructions for Form 4562).
5. Repayment of supplemental unemployment benefits under the Trade Act of 1974 (see IRS Publication 525).
6. Contributions to section 501(c)(18)(D) pension plans (see IRS Publication 525).
7. Contributions by certain chaplains to section 403(b) plans (see IRS Publication 517).
8. Attorney fees and court costs for actions involving certain unlawful discrimination claims, but only to the extent of gross income from such actions (see IRS Publication 525).
9. Attorney fees and court costs paid in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations, up to the amount of the award includible in your gross income.
10. Housing deduction from IRS Form 2555.
11. Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041), box 11, code A. See the Instructions for Schedule K-1 (Form 1041).

Finally, skipping from 24k to the end of the alphabet, (leaving room for possible future items on the schedule), we get the final possible above-the-line write-off, line 24z. It’s the always popular catchall entry, where you report any adjustments not entered elsewhere.

One possibility here is income reported on Form 1099-K, the statement issued by third-party payers for online app and marketplace transactions. This statement should not include any money that was for personal money exchanges, such as paying your part of a meal tab that a friend paid for in full, or for selling a personal item, such as an old piece of furniture, at a loss. Those transactions are not taxable income.

However, if that 1099-K amount you entered in Part I of Schedule 1 (line 8z) does include such transactions, question/answer number 6 on the IRS’ 1099-K frequently asked questions page notes that you can offset it on Part II adjustments line 24z.

And with that final alphabet letter, so ends the potential two dozen above-the-line deductions.

As with many tax breaks, claiming above-the-line deductions requires a bit more work. But tax software or your tax preparer can help.

And what’s a bit more work when it means you can shave a few more dollars off what you owe Uncle Sam? A reduced tax bill is the ultimate goal of all taxpayers, whether claiming the standard deduction or itemizing, every filing season.

You also might find these items of interest:

• 4 ways to file your taxes for free
• Tax statements you need to file your 2024 tax return
• Questions to ask, and answer, before you tackle your 1040

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