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Above-the-Line (1040) Deduction Changes

Educator Expenses


For 2019, eligible educators can deduct up to $250 of qualified out-of-pocket expenses paid.  If both, the taxpayer and the spouse are eligible educators, they can each take $250, but neither spouse can take more than $250 of their own qualified expenses.  Eligible expenses are those paid for books, supplies, computers, and related items, and supplementary materials used in the classroom.

Health Savings Accounts


A health savings account, HSA is a custodial account set up with a qualified HSA trustee to reimburse certain out-of-pocket medical expenses.  To establish an HSA, a participant must have a high-deductible health plan (HDHP).  The chart below shows the increased limits for 2019.



For HSA beneficiaries age 55 or older, a catch-up contribution of $1,000 can be made any time during the year, beginning with the year the plan participant turns 55.  A husband and wife who are both age 55 or older must have their own separate HSA account in order for both to take advantage of the additional $1,000 contribution.  A contribution by a plan participant will be tax-deductible on Schedule 1, Form 1040.  If there is any contribution or distribution during the tax year, the participant must file Form 8889.

Medical Savings Accounts


An Archer Medical Savings Account (MSA) is a trustee or custodial account set up to save money for future medical expenses.  These were originally set up to help self-employed individuals and employees of small employers meet their medical care costs.  Beginning after the tax year 2007active participation in one of these plans required coverage under a high deductible health plan (HDHP) of a participating employer.




Either the taxpayer who is an employee or his employer may make contributions to an MSA.  The employer and employee cannot make contributions in the same year.  Employer contributions are tax-free.  Self-employed individuals and employees whose employers do not contribute can make their own contributions to an MSA.  The contribution limit is the lesser of the limit indicated in the above chart or earnings from the employer with whom the employee has the HDHP (self-employment earnings if self-employed).  Any employee or self-employed contribution will be tax-deductible as an adjustment on Schedule 1 (Form 1040).  If there is any contribution or distribution during the year, the taxpayer must file Form 8853.

Income Limits for Student Loan Interest Deduction


For 2019, the amount of the Student Loan Interest deduction is gradually reduced if the taxpayer’s filing status is Married Filing Jointly, Single, Head of Household, or Qualifying Widow(er), and modified AGI is within the amounts noted in the table below. 




Taxpayers may deduct up to $2,500 of interest paid on qualified education loans for college or vocational school expenses as an adjustment to income.

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Cathy Fisher

Common Cents Bookkeeping and Tax Preparation

Serving Henderson, NC, Buncombe County, Polk County, Transylvania County

E: cathy@commoncentsqbo.com

P: 828-595-2835

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