Common Tax Deductions, and the Qualifications That Come With Them

    From student loan interest to moving expenses, some potential deductions come with restrictions

    Tax day is coming and so, too, are the questions. Can I deduct student-loan interest? What about moving and cellphone expenses?

    There are a number of potential deductions like those that are common, particularly among younger taxpayers, but rife with qualifications. For example, you generally can deduct the interest on your student loans, but you won’t be able to if you make too much money.

    What you can and can’t deduct depends on your personal situation and a complex and cumbersome tax code. Here are five such expenses taxpayers may be able to deduct depending on their circumstances:

    Student Loan Interest

    Taxpayers may be able to deduct up to $2,500 in student loan interest a year, depending on certain income limits. For example, if you’re single and your modified adjusted gross income is $80,000 or more, you won’t get the deduction.

    You also can’t be married filing separately or be claimed as a dependent on someone else’s return if you want to get this deduction, says Jeffrey Levine, chief retirement strategist at Ed Slott & Co.

    Home-Office Deduction

    Self-employed people who have a home office may be able to deduct a portion of their rent, mortgage interest, property taxes and utilities based on the square footage of space used as their home office as long as long as it is used exclusively and regularly for business-related use, says Lisa Greene-Lewis, a tax expert at TurboTax.

    With the simplified home-office deduction, the Internal Revenue Service allows you to declare $5 per square foot of your home used for business up to 300 square feet, or a maximum of $1,500.

    Moving Expenses

    To be able to deduct moving expenses, the purpose of the move must be job-related and the location of the new job must pass the distance test (at least 50 miles farther from the former home than the old job was from the former home), says Gil Charney, director at the Tax Institute at H&R Block.

    Also, if the taxpayer is an employee, he or she must work full time in the general area of the new job location for at least 39 weeks during the first 12 months immediately after the move. If the taxpayer is self-employed, he or she must work full time for at least 39 weeks during the first 12 months and a total of at least 78 weeks during the first 24 months after moving to the new location, he says.


    Self-employed taxpayers who use their cellphones exclusively for business can deduct both the physical phone and the ongoing bill, Mr. Charney says. (For those taxpayers with a home office, the expense of a first landline in the home is never deductible, no matter how much the phone is used for business.)

    Employees who use a personal cellphone for their jobs can deduct the job-related portion if their employer rejects their claim for reimbursement. However, as an employee and not a business owner, the unreimbursed expenses, along with all miscellaneous itemized deductions, can be deducted only to the extent the total exceeds 2% of the taxpayer’s adjusted gross income, Mr. Charney says.

    Charitable Giving

    Contributions to qualified charitable organizations made by text message are deductible in the year you send the text message if it’s charged to your phone or wireless account, says Jodi Robinson, tax managing director at accounting firm CBIZ MHM.

    Contributions charged to a credit card are deductible in the year charged—even if the bill is paid after the end of the year, she says. The value of purely your volunteer time or services to a charity isn’t deductible, however.

    Write to Veronica Dagher at

    VIDEO: Tax Deductions You Might Be Missing

    Reprint from Wall Street Journal

    Trackback from your site.

    Leave a Reply