The following are 20 “Below-The-Line” Deductions Every Taxpayer Should Know:
1) Medical & Dental Expenses (over 7.5% of AGI)
What: Out-of-pocket medical/dental costs above 7.5% of AGI. Includes premiums you paid with after-tax dollars, doctor bills, prescriptions, glasses, hearing aids.
Example: AGI $60,000 → first $4,500 isn’t deductible; you can deduct the amount above that.
2) Medical Travel & Lodging (part of #1)
What: Mileage to appointments and limited lodging when primarily for medical care.
Example: Driving 900 miles for chemo adds a deductible medical mileage amount.
3) State & Local Income Taxes or General Sales Taxes (pick one)
What: Choose whichever is larger, but overall SALT total is capped (see below).
Example: No income tax state? Elect the sales tax tables plus big purchases.
4) Real Estate Property Taxes
What: Property taxes on your home/land count toward the SALT limit.
Example: County bill on your residence is deductible (subject to the cap).
5) Personal Property Taxes
What: Value-based vehicle registration taxes are deductible (also part of SALT).
Example: Your state charges $420 based on your car’s value—deductible.
SALT cap note: State & local income/sales taxes + real estate + personal property taxes are combined and limited each year by law. We’ll calculate your best mix.
6) Home Mortgage Interest (Acquisition Debt)
What: Interest on loans used to buy/build/substantially improve your main or second home (subject to loan-balance limits and dates).
Example: Interest on your purchase mortgage for the home you live in.
7) Home Equity Loan/HELOC Interest (Used for Improvements)
What: Interest is deductible only if proceeds improve the home securing the loan.
Example: HELOC funds used to remodel the kitchen—interest may qualify.
8) Mortgage Points on a Purchase
What: Points paid to get a lower rate on a purchase are often deductible in the year paid.
Example: You bought a home and paid 1 point—deduct it if conditions are met.
9) Refinance Points (Amortized)
What: Points on a refi are usually deducted over the life of the loan.
Example: 30-year refi with $3,000 in points → deduct about $100 per year.
10) Investment Interest Expense
What: Interest paid on money you borrowed to buy taxable investments—deductible up to your net investment income.
Example: Margin interest at your brokerage deducted against interest/dividends.
11) Cash Charitable Contributions
What: Gifts to qualified charities—subject to AGI limits and documentation.
Example: $2,400 to your church with year-end statements to substantiate.
12) Non-Cash Charitable Gifts
What: Clothing, furniture, and appreciated stock (often best for tax savings). Extra rules kick in above certain thresholds.
Example: Donate $8,000 of long-held stock; deduct FMV and avoid capital gain.
13) Charitable Mileage & Out-of-Pocket Volunteer Costs
What: Miles driven and unreimbursed supplies for qualified volunteer work.
Example: You buy snacks and drive to weekly shelter shifts—those costs can count.
14) Casualty Losses in Federally Declared Disaster Areas
What: Personal casualty losses are deductible only if tied to a federal disaster; special calculation applies.
Example: Storm damage after your county is declared a disaster.
15) Gambling Losses (Up to Winnings)
What: You can deduct losses only to the extent of your reported gambling winnings; keep logs.
Example: Won $3,000 at the casino; you can deduct up to $3,000 of documented losses.
16) Estate Tax on Income in Respect of a Decedent (IRD)
What: If you inherit items like an IRA that were taxed in the estate, you may deduct estate tax attributed to that income.
Example: You take a taxable IRA distribution and claim the IRD deduction calculated from the estate’s return.
17) “Claim of Right” Repayments (Income You Had to Pay Back)
What: If you repaid >$3,000 of income you previously included, you may deduct it (or compute a credit—whichever saves more).
Example: You repay a prior-year bonus after a dispute; we’ll compare deduction vs. credit.
18) Foreign Income Taxes (Deduction Alternative)
What: You can deduct foreign income taxes paid instead of taking the foreign tax credit—whichever is better.
Example: Small amount of foreign tax where the deduction yields the bigger benefit.
19) Qualified Business Income (QBI) Deduction (Section 199A)
What: A special from-AGI deduction—up to 20% of qualified business income from pass-throughs, subject to thresholds, wage/property limits, and business type rules.
Example: Schedule C or rental with QBI—potential extra deduction even if you don’t itemize.
20) The Standard Deduction (when it beats itemizing)
What: A flat amount that often exceeds your itemized totals; you choose the higher result each year.
Example: Your itemized add up to $17k but the standard is higher—you take the standard and still may get QBI if eligible.
Why work with RDA Tax Services
- We ask smarter questions. Many “missing” deductions are really missing context (HELOC use, disaster declarations, IRD, repayment rules).
- We compare strategies. SALT mix vs. sales tax election, deduction vs. credit (foreign taxes, claim of right), itemize vs. standard, cash vs. appreciated property gifts.
- We plan ahead. Timing points, medical procedures, charitable bunching, and QBI optimization can change your outcome—before December 31.
Bottom line: Don’t leave money on the table—or trigger problems with guesswork. Let RDA Tax Services translate your life into legal deductions, file accurately, and build a year-round plan that keeps more in your pocket.
👉 Book your FREE Tax Checkup today, and we’ll map which below-the-line deductions—and strategies—fit your return this year.