Above-the-line deductions (claimable without itemizing)
- HSA contributions: up to $4,300 single / $8,550 family in 2026 (verify current).
- Traditional IRA contributions (subject to income limits if covered by workplace plan).
- Student-loan interest: up to $2,500/year, phased out at higher incomes.
- Self-employment health insurance premiums.
- Half of self-employment tax.
- Educator expenses: $300 for K–12 teachers' classroom supplies.
Credits worth thousands
- Earned Income Tax Credit: up to ~$7,830 with three qualifying children (2026; verify).
- Child Tax Credit: $2,000 per qualifying child under 17.
- Saver's Credit: up to $1,000 single / $2,000 MFJ for retirement contributions at lower incomes.
- American Opportunity Credit: up to $2,500/year per undergraduate student.
- Lifetime Learning Credit: up to $2,000/year per return for any post-secondary education.
- Residential Clean Energy Credit: 30% of solar, geothermal, and heat-pump installations.
Self-employment expenses people forget
- Home office (simplified method: $5/sq ft up to 300 sq ft).
- Self-employed health insurance (separate from itemized medical deduction).
- Vehicle: business mileage at the standard IRS rate (~67¢/mile in 2026).
- Phone, internet, software (business-use percentage).
- Health Reimbursement Arrangement contributions.
- Retirement plan contributions to a Solo 401(k) or SEP IRA.
- Continuing education and professional licensing.
Itemized deductions commonly missed
- Charitable mileage at $0.14/mile.
- Sales tax in no-income-tax states using the IRS calculator.
- Property taxes paid at closing during a home purchase.
- Mortgage points paid in a refinance (amortized over loan life).
- Casualty losses in federally declared disaster areas.
Documentation discipline
Save receipts, mileage logs, and acknowledgment letters all year, not in April. Apps like MileIQ, Expensify, and Stride automate the worst of it.
For donations over $250, you need a written acknowledgment from the charity. For non-cash donations over $5,000, you need a qualified appraisal. Skip the paperwork and the IRS can disallow the deduction even if the donation was legitimate.
When the credit beats the deduction (always)
A $1,000 credit always saves $1,000. A $1,000 deduction saves your marginal rate × $1,000 ($120 in 12% bracket; $370 in 37% bracket).
Any time the same activity qualifies for a credit and a deduction (some education spending), take the credit.
What the IRS audits most often
- Earned Income Tax Credit claims with errors (high audit rate due to complexity).
- Schedule C self-employment with very high deductions relative to revenue.
- Charitable deductions over 30% of AGI.
- Home office claims on returns where the taxpayer is also a W-2 employee at the same address.
- Crypto transactions reported incorrectly.
