When filing your taxes, deductions are a way to reduce your taxable income. Sometimes called "write-offs," deductions typically come from expenses. Using tax deductions to your advantage can lower how much you owe, making it easier to navigate tax season.
But how do they work, and is an HSA tax deductible?
Standard vs. Itemized Deductions
There are a couple of ways to claim tax deductions. The most common is the standard deduction. This method applies to most people, and its figure varies every year. The standard deduction for the 2023 tax year is $13,850 for individual filers, $20,800 for heads of households and $27,700 for couples filing jointly.
Another option is to make itemized deductions. As the name implies, this route requires you to provide specific dollar amounts of eligible deductions. Choosing itemized deductions makes sense if your total surpasses the limits for standard deductions.
It's more difficult to claim itemized deductions. You must report fixed amounts on the Schedule A of Form 1040 or 1040-SR.
What Can I Claim as a Deduction?
There are many possible deductions available. You don't have to worry about individual items if you choose the standard deduction. But for itemized deductions, you must report accurate figures. Some options have limits, so it's wise to work with a tax professional if you have several deductions you want to claim.
The most common deductions include up to $2,500 in student loan interest, up to $750,000 of mortgage interest on secured home mortgage debt and up to $10,000 on state taxes.
Is an HSA Tax Deductible?
You can deduct contributions if you have a health savings account (HSA). You can claim up to the annual contribution limits as a deduction. For 2023, that's $3,850 for self-only coverage and $7,750 for family coverage.
That's not all. Taxpayers may qualify for deductions if they have substantial medical or dental expenses. You can claim up to 7.5 percent of your adjusted gross income.
Individual retirement accounts (IRAs), 401(k) plans and other qualifying retirement plans all come with tax-deductible contributions as well.
Read a similar article about Consolidated Omnibus Budget Reconciliation Act here at this page.
