It’s tax season! While you may not be able to avoid paying all taxes, there are tax breaks that allow you to lower your 2022 tax bill. Tax deductions lower your taxable income — how much of your income you actually pay tax on — while tax credits are a dollar-for-dollar reduction to your tax bill. Knowing which deductions or credits to claim is challenging, so we created this handy list of 49 tax deductions and tax credits to take this year.
1. Charitable contribution deduction
For tax years 2020 and 2021, taxpayers who claimed the standard deduction could also deduct up to $300 of charitable donations they made in 2021 (up to $600 for joint filers). In 2022, if you want to deduct more of your contributions, the only option is to take the official deduction for charitable contributions, which most people don’t qualify for because it’s an itemized deduction. Many people have a lower tax bill by taking the standardized deduction.
2. Child tax credit (CTC)
The child tax credit is for taxpayers who pay the majority of care for at least one child under the age of 17. President Biden expanded the credit for 2021, but it’s returning to 2019 levels for the 2022 tax year. It was previously worth up to $3,600 per child age five or younger and $3,000 per child between the ages of six and 17. For 2022, you can get up to $2,000 per dependent. The maximum CTC you can get will start to decrease when your modified adjusted gross income reaches a certain level — $400,000 for joint filers and $200,000 for every other tax filing status. Claim the CTC directly on Form 1040.
3. Student loan interest deduction
Taxpayers with student loans can deduct up to $2,500 of interest incurred. You can also include interest via credit card debt that came from helping to pay for education. Loans qualify as long as you paid for them and they were for yourself, a spouse or a dependent. You can’t get the deduction if your filing status is married but filing separately. Your available deduction also decreases once your modified adjusted gross income hits $70,000 (if you’re a single filer) or $145,000 (if you’re married filing jointly).
4. American Opportunity tax credit
The AOTC is worth up to $2,500 per student and is available for education expenses from your first four years of higher education. Qualifying education expenses include tuition, books and classroom supplies. You can include these expenses even if you didn’t pay them directly to the school. The credit begins to phase out once your gross income reaches $90,000 (for single filers) or $180,000 (for joint filers). Claim the AOTC by completing Form 1040 Schedule 3 and Form 8863.
5. Lifetime learning credit (LLC)
You can claim the lifetime learning credit for tuition and similar expenses from undergraduate courses, in addition to graduate courses and professional degree courses. Unlike other education credits, the LLC also covers the cost of classes that help you learn or improve job skills. There’s no limit to how many years you can claim it. The LLC is only worth up to $2,000 per tax return and you must have at least $10,000 of expenses to receive the full credit. Your gross income must also be less than $80,000 if you’re a single filer, or $180,000 if you’re a joint filer to get the maximum credit. You can claim the LLC by completing Form 8863.
6. Educator expenses
Certain school teachers can deduct up to $300 for money they spent on classroom supplies or on professional development courses related to the curriculum they teach. In 2022, educators can also deduct unreimbursed expenses for protective items to stop the spread of COVID-19. [1] Eligible items include face masks, hand sanitizer, disposable gloves, and other items recommended by the CDC. You can qualify for this deduction if you’re a K-12 teacher, counselor, aide or principal who worked in a school for at least 900 hours during a school year. Use Form 1040 Schedule 1 to claim this deduction.
7. Moving expenses for members of the military
You can deduct moving expenses on your taxes if you’re an active-duty member of the U.S. Armed Forces and you had to move because of a permanent change of station. To claim this deduction for 2022, fill out IRS Form 3903 and Schedule 1.
8. Travel expenses for military reserve members
Members of the military reserve forces can deduct the cost of travel as a business expense if they traveled more than 100 miles to perform reserve services. Use Form 2106 and Schedule 1 to claim this deduction.
9. Business expenses for performing artists
Low-income performing artists can deduct certain business expenses, such as costs necessary to complete a rehearsal. However, qualifying for this deduction is challenging. You must have an adjusted gross income of $16,000 or less; your business expenses must have been at least 10% of your gross income; you must have worked as a performing artist for multiple employers; and each employer must have paid at least $200. If you think you qualify, look for the deduction on Form 2106 and Schedule 1.
10. Business expenses for fee-basis government officials
State and local government officials who are paid on a fee basis can deduct their business expenses on Form 2106 and Schedule 1.
11. Half of the self-employment tax
The self-employment tax was 15.3% for 2022 and anyone who paid that full tax can then deduct half of it on their 2022 taxes. Normally, employees pay a tax of 7.65% on their income (FICA taxes) and their employers also pay that amount for a combined tax of 15.3%. Self-employed workers need to pay the whole tax, but can then deduct the employer portion on their federal tax return. Use Schedule SE to calculate your self-employment tax and Schedule 1 to claim this deduction.
12. Retirement savings for self-employed individuals
Self-employed individuals and small business owners can deduct their contributions to retirement accounts on Schedule 1. This deduction applies to SEP IRAs, SIMPLE IRAs and similar retirement plans.
13. Health insurance premiums for self-employed workers
Self-employed taxpayers may be able to deduct their health insurance premiums, as well as premiums for dental and long-term care insurance. You can also include any premiums you paid for your spouse, your dependents, and your non-dependent children who are under age 27. Use Schedule 1 to claim this deduction.
14. Home office deduction
For taxpayers who worked from home regularly in 2022, the IRS allows a deduction for associated expenses, including repairs, utilities, rent, a security system and renters insurance. However, you can only deduct costs tied directly to your work and to the space you use as your home office. For example, you won’t be able to deduct the full electricity bills for your home and will instead need to calculate what portion of your bills applied to your home office space. Claim it using Form 8829 and Schedule C.
15. Alimony payments
You can deduct your alimony payments if your divorce agreement took effect in 2018 or earlier. The 2017 tax reform eliminated this deduction for all agreements that took effect in 2019 or later. To claim this deduction, you need to know how much alimony you paid, the Social Security number of the recipient, and the date your agreement took effect. This information all goes on Schedule 1.
16. Early withdrawal penalties from a CD
If you paid any early withdrawal penalties for a savings account, namely a certificate of deposit (CD), you can deduct that penalty on your federal taxes. Check your copies of Form 1099-INT or Form 1099-OID to see how much you were charged for penalties, and then can claim the deduction on Schedule 1.
17. The IRA deduction
If you contributed to a traditional IRA with money you already paid income tax on, you may be able take the IRA deduction for the tax you paid. This includes any money you got from an employer who withholds income tax. Traditional IRAs are tax-advantaged, which means you don’t have to pay income tax on your savings or investments until you withdraw the money in retirement. Claim this deduction by using Schedule 1, but it may be reduced if you also have a retirement plan through your employer.
18. HSA contributions
Just like the IRA deduction, you can deduct some health savings account (HSA) contributions you made using money you already paid income tax on. This deduction isn’t available for contributions that come directly out of your paychecks. Claim this deduction on Schedule 1 if you qualify for it.
19. The saver’s credit
Low-income taxpayers can deduct up to 50% of their contributions to a SIMPLE, SEP, traditional or Roth IRA, 401(k), 403(b), governmental 457(b) plan, or ABLE account. The maximum saver’s credit available is $2,000 for joint filers and $1,000 for all others. Use Form 8880 and Form 1040 Schedule 3 to claim the saver’s credit. Note that the saver’s credit is officially called the retirement savings contributions credit.
20. The Archer MSA deduction
This deduction covers health care costs for self-employed individuals and small business employees who are covered by a high-deductible health plan (HDHP). Complete Form 8853 and Schedule 1 to claim this deduction.
21. Jury duty pay
Taxpayers can deduct jury duty pay in a handful of situations. You must have been paid by your employer while you were completing jury duty, and then you must have given any pay you received from jury duty to your employer. You can deduct that jury duty pay on Schedule 1.
22. Deduction for personal property rental
If you don’t work in a line of business that involves renting out your personal property, such as a car, but you still earn some side income from renting out your property, you can deduct expenses related to that rental income. For example, you may be able to deduct gas from renting out your car. Use Schedule 1 to claim this deduction.
23. Olympic medals
In addition to representing your country, winning an Olympic medal can get you a tax deduction. The value of medals that you receive from the United States Olympic & Paralympic Committee and prize money you earn in the Olympics or Paralympics may be deductible if your gross income is less than $1 million. Find this deduction on Schedule 1.
24. Repayment of supplemental unemployment benefits
Unemployment benefits are taxable but if you received an overpayment of unemployment benefits during the year, and you paid it back, you can deduct the amount of that overpayment on Schedule 1. Just make sure to take the deduction in the same year that you paid it back. While you can still deduct it in later years, the process is more of a hassle.
25. Deduction for whistleblower fees
This deduction is an incentive to help taxpayers detect and alert the IRS to tax law violations. The deduction can cover attorney fees and court costs you paid in connection with helping the IRS. To claim the deduction, you must have received an award from the IRS (known as a whistleblower award). Then you can deduct your fees on Schedule 1.
26. QBI deduction
You may qualify for this deduction if you had business income from a sole proprietorship, partnership, S corporation, trust, or estate. The qualified business income deduction, also called the QBI deduction, lets you deduct up to 20% of that income. You may also qualify if you had income from REIT dividends or from a publicly traded partnership (PTP). You don’t need to itemize to claim the QBI deduction, but you will need to fill out Form 8995 or Form 8995-A.
27. The medical expense deduction
If you had medical expenses that exceeded 7.5% of your adjusted gross income, you may be able to deduct them with the medical expense deduction. However, this is an itemized deduction, which means you should only deduct it if all of your itemized deductions combined are worth more than your standard deduction. The standard deduction for 2021 (the taxes you file in early 2022) is $12,950 for single filers and $25,900 for joint filers.
28. The SALT deduction
The state and local tax deduction, known as the SALT deduction, lets you deduct the value of your state and local property tax payments, plus either your income or sales taxes. This is an itemized deduction, so your combined itemized deductions should be more than a certain amount for you to claim it. If you’re itemizing, use Schedule A.
29. The mortgage interest deduction
If you have a mortgage, the mortgage interest deduction may allow you to deduct your interest. You need to itemize to claim this deduction. Many people no longer qualify to itemize after the 2017 tax reform but if you do, meaning your total itemized deductions are worth more than your standard deduction, itemizing can potentially save you a lot.
30. Other income taxes you’ve already paid
If you’ve already paid other forms of income tax, like to a foreign government if you worked abroad, you may be able to deduct them on Schedule A. This itemized deduction may also cover certain payments you made for the generation skipping tax (GST), which is part of the gift tax.
31. Foreign tax credit
If you can’t take the itemized deduction for foreign taxes you paid, you may still be able to get a credit for those payments. You can generally claim the credit if you paid income tax of at least $300 during the year to either a foreign country or a U.S. territory. Complete Form 1116 and Schedule 3 to claim the credit.
32. Interest for a loan on an investment property
If you bought an investment property by taking out a loan, you can deduct the interest you pay on that loan. This deduction can apply to investment properties but not to stocks, securities, or anything that generates tax-exempt interest (like certain bonds). This tax break requires itemizing deductions and likely Form 4952.
33. Casualty & theft losses from a federally declared disaster
If you lost your home, vehicles, or other personal property in a federally declared disaster, you may be able to deduct the value of those losses. You can qualify for the deduction whether the property was completely destroyed, significantly damaged, or stolen. This is an itemized deduction, so you will also need to have significant other itemized deductions for it to be worth claiming. Note that if your property was insured, before you can claim this deduction, you must file an insurance claim and then reduce this deduction by the amount of your insurance reimbursement. [2] Learn more with the instructions to Form 4684 and Schedule A.
34. Gambling losses
Did you have significant gambling losses during the year? You may be able to deduct them on Schedule A along with your other itemized deductions. Just remember that you also need to include your gambling winnings as part of your income for the year.
35. Additional child tax credit (ACTC)
The additional child tax credit can be taken in addition to the CTC, and it just allows you to receive a refund if the CTC brings your tax liability — the total income tax you owe for the year — below $0. The refund for the ACTC in this situation is up to $1,500. If you are claiming the ACTC, complete Schedule 8812.
36. Credit for other dependents (ODC)
This credit allows you to deduct up to $500 for each dependent who you can’t claim with either the CTC or ACTC. Paying for the care of a parent will usually qualify. You can only take the ODC if you are within the income limits. The credit starts to phase out once your AGI reaches $400,000 if you’re married filing jointly, or $200,000 if you use any other filing status. Claim the credit for other dependents on your 1040; it’s combined with the child tax credit.
37. Child and dependent care credit
Working parents can claim this credit for costs they spent on child care while they actively looked for a job. You can include the cost of a housekeeper, maid, cook, cleaner, or babysitter. For 2022, the credit is nonrefundable and has been reduced back to a maximum 35% of your expenses. The maximum credit for 2022 is $3,000 if you have one dependent under 13, and $6,000 for two or more dependents. Claim this credit with Form 2441 and Schedule 3. You can get necessary information from your care provider with Form W-10. The care provider doesn’t qualify if they’re your spouse or dependent.
38. Adoption credit
New parents can qualify for a tax credit worth $14,890 in adoption costs per child. The 2022 adoption credit begins to phase out once your income reaches $223,410 and is not available if you make more than $263,410. Use Form 8839 to claim the adoption credit.
39. Earned income tax credit (EITC)
The earned income tax credit is available to low-income and moderate-income taxpayers, with the highest credits going to taxpayers with dependents. A dependent can qualify if they’re a minor, under 24 and in college, or if they are living with permanent and total disability. The value ranges ranges from a maximum of $560 for taxpayers with no children, to a maximum of $6,935 for taxpayers with three or more children. You can claim the EITC right on your Form 1040 — the main tax form — but you also need to complete Schedule EIC if you have dependents.
40. Premium tax credit (PTC)
The PTC is a type of health insurance subsidy that refunds your payments for health insurance premiums. To be eligible, your projected household income must be between 100% and 400% of the federal poverty line for your family size.
Unlike many other credits, you can also choose to receive it in advance to help you pay your premiums each month. What you take in advance is called the advance premium tax credit (APTC). The APTC is only available if you get a plan through the Obamacare marketplace. It’s important to note that you won’t qualify if you have health insurance through an employer. If you took the advance option, you need to file Form 8962 with your tax return to prove that you received the correct amount of the PTC.
41. Credit for prior year minimum tax
If you paid alternative minimum tax (AMT) in a previous year but don’t have to pay it this year, you may be able to claim a credit this year to get back some of the AMT you paid. This credit only applies to AMT you paid because of “deferral items,” such as depreciation or incentive stock options that you exercised but didn’t sell. This credit can also be claimed by individuals, estates, or trusts. Learn more in the instructions for Form 8801.
42. Credit for the elderly or the disabled
Individuals who are at least 65 years old at the end of 2022 can qualify for a credit worth between $3,750 and $7,500. You can also qualify if you’re under 65 but receive disability benefits. There are income limits, which range from $12,500 to $25,000 based on your filing status. Claim this credit by using Schedule R.
43. Residential energy efficient property credit
Taxpayers may be able to claim this tax credit for the cost of installing and using certain types of renewable energy for their home. Eligible energy costs include those for solar electric, solar water heating, fuel cells, wind energy, and geothermal heat pumps. Fill out and attach Form 5695 and Schedule 3 of Form 1040 to claim the credit.
44. Energy efficient home improvement credit
This credit is available for certain home improvements you made to your home in order to increase energy efficiency. If you’ve made home improvements like installing insulation to reduce heat loss, got a new furnace or heater, added an electric heat pump to heat water, upgraded a stove to burn biomass fuel to heat your home or water, or even redid your exterior windows or doors. Certain products may need to meet performance or quality standards to qualify, so keep an eye out for that. Claim this credit by using Form 5695 and Schedule 3.
45. Credit for electric plug-in vehicles
You can qualify for a tax credit if you purchased a qualified plug-in electric vehicle during the year for up to $7,500. This is available for electric cars and motorcycles, whether for business or personal use. Form 8936 will help you determine your credit amount.
46. Credit for federal fuel taxes
Did you use a vehicle for a nontaxable purpose, such as for farm work or off-highway business use? If so, you can likely receive a tax credit for the federal fuel taxes you paid for gasoline. All fuel in the U.S. includes an excise tax, and you can use Form 4136 to get it refunded on your taxes.
47. Mileage reimbursement deduction
If you had to drive for work in 2022 and your employer didn't reimburse your expenses for fuel, you can deduct some of those costs. For travel through the first half of 2022 (through June 30), you can deduct 58.5 cents per mile by using the mileage reimbursement deduction. The IRS introduced an increased rate in light of higher gas prices for the second half of the year: 62.5 cents per mile. The deduction mostly covers fuel, but in some cases will cover your car insurance, parking, and maintenance costs. Your expenses must exceed 2% of your AGI, though. Fill out Form 2106 and Schedule 1 to take this deduction.
48. Low-income housing credit
Taxpayers who build a low-income rental building may qualify for this credit. There are multiple compliance and record keeping requirements to claim this credit, and some may differ depending whether the building was inhabitable before or after Jan. 1, 2008. Use Form 8586 to claim the low-income housing credit.
49. Credit for excess Social Security and RRTA tax withheld
For the most part, employers are supposed to withhold 6.2% of your income for Social Security tax, but that only applies to income up to $147,000, meaning the maximum Social Security tax you could pay in 2021 is $9,114. However, certain high-income individuals may have paid more if they had multiple employers withholding Social Security taxes. This credit may allow you to recoup any excess you paid. Use Schedule 3 of Form 1040 to claim this credit. If any one employer withheld too much Social Security tax, you won’t be able claim this credit because your employer should adjust the excess for you. If your employer doesn't adjust the overcollection, you can use Form 843 to claim a refund.
Want to learn more? Check out our guide to understanding taxes here.
Image: Lambert
