Welcome to the United States! Navigating the American tax system for the first time can feel overwhelming—trust me, you're not alone in thinking that. But here's some good news: understanding tax deductions can actually save you hundreds or even thousands of dollars on your tax bill.
Whether you just moved to the
U.S., recently started working here, or are filing your first American tax
return, this guide will help you understand what tax deductions you can claim.
Let's make tax season a little less stressful and a lot more rewarding!
What is a Tax Deduction, Anyway?
Let me start with the basics. A
tax deduction reduces your taxable income, which means you pay less in taxes.
Think of it like this: if you earn $50,000 and have $10,000 in deductions, you
only pay taxes on $40,000. That's real money back in your pocket!
There are two main ways to
claim deductions: the standard deduction or itemized deductions. As a newcomer,
the standard deduction is usually your best bet—it's simple, and for most
people, it's worth more than itemizing anyway.
The Standard Deduction: Your Starting Point
The standard deduction is a
fixed amount that reduces your taxable income. For 2026, here's what you can
deduct:
•
$15,000 if you're filing as Single
•
$30,000 if you're Married Filing Jointly
•
$22,500 if you're Head of Household
You don't have to do anything
special to claim the standard deduction—just check the box on your tax return.
Easy, right?
However, if you're a
nonresident alien for tax purposes, you generally can't take the standard
deduction (there are some exceptions for students and business apprentices from
India). In that case, you'll need to itemize your deductions.
Common Tax Deductions for Newcomers
Even if you're taking the
standard deduction, there are several "above-the-line" deductions you
can claim that reduce your adjusted gross income. Here are the most common ones
that apply to newcomers:
1. Student Loan Interest Deduction
If you're paying off student
loans (whether from the U.S. or your home country), you can deduct up to $2,500
of the interest you paid. This is HUGE for recent graduates!
Here's what you need to know:
•
The loan must be for qualified education expenses
•
You (or your spouse) must have been enrolled at least
half-time
•
Your income must be below certain limits ($90,000 for
single filers, $185,000 for married filing jointly)
Your loan servicer will send
you Form 1098-E showing how much interest you paid. Keep this form!
2. Educator Expenses
Are you a teacher, instructor,
counselor, or aide in a school? You can deduct up to $300 of unreimbursed
classroom expenses ($600 if married filing jointly and both spouses are
educators). This includes books, supplies, and even COVID-related items like
masks and hand sanitizer.
3. Health Savings Account (HSA) Contributions
If you have a high-deductible
health insurance plan and contribute to an HSA, those contributions are
tax-deductible! For 2026, you can contribute and deduct:
•
$4,300 for individual coverage
•
$8,550 for family coverage
•
Plus an extra $1,000 if you're 55 or older
HSAs are triple tax-advantaged:
deductible going in, grows tax-free, and tax-free when used for medical
expenses. It's one of the best tax breaks available!
4. IRA Contributions
Contributing to a traditional
IRA can reduce your taxable income. For 2026, you can contribute up to $7,000
($8,000 if you're 50 or older) and deduct it from your income—but only if you
meet certain income requirements and aren't covered by a workplace retirement
plan.
Even if you have a 401(k) at
work, you might still qualify for a partial deduction. It depends on your
income level.
5. Moving Expenses for Military Members
Unfortunately, most people
can't deduct moving expenses anymore. However, if you're an active-duty member
of the military moving due to a military order, you CAN still deduct these
costs. This includes transportation, lodging, and storage.
Itemized Deductions: When They Make Sense
Itemizing means listing out
specific deductible expenses instead of taking the standard deduction. You
should only itemize if your total itemized deductions exceed your standard
deduction amount.
Here are the main categories of
itemized deductions:
Medical and Dental Expenses
You can deduct medical and
dental expenses that exceed 7.5% of your adjusted gross income. So if you made
$50,000 and had $5,000 in medical bills, you could deduct $1,250 ($5,000 -
($50,000 × 7.5%)).
This includes:
•
Doctor and dentist visits
•
Prescription medications
•
Medical equipment
•
Insurance premiums (if you're self-employed or not
covered by an employer plan)
•
Travel expenses for medical care
State and Local Taxes (SALT)
You can deduct state and local
income taxes OR sales taxes (not both), plus property taxes. However, there's a
cap: you can only deduct up to $10,000 total ($5,000 if married filing
separately).
For most newcomers, this won't
exceed the standard deduction unless you bought a house or live in a high-tax
state like California or New York.
Home Mortgage Interest
If you bought a home in the
U.S., you can deduct the interest you paid on your mortgage (up to $750,000 of
debt). Your lender will send you Form 1098 showing how much interest you paid.
This is often the deduction
that pushes people over the standard deduction threshold, especially in the
first few years of a mortgage when interest payments are highest.
Charitable Contributions
Donations to qualified U.S.
charitable organizations are tax-deductible. This includes:
•
Cash donations (you need a receipt for donations over
$250)
•
Property donations (like clothing or furniture)
•
Mileage driven for volunteer work (14 cents per mile in
2026)
Keep detailed records! The IRS
can ask for proof of your charitable giving.
Special Considerations for Recent Immigrants
Tax Treaty Benefits
Does your home country have a
tax treaty with the United States? Many countries do! These treaties can
provide special deductions or exemptions. For example, some treaties allow
students and scholars to deduct certain income or exclude scholarship money.
Check IRS Publication 901 for a
list of tax treaties and their provisions. This could save you significant
money!
Foreign Tax Credit
If you paid taxes to another
country on income that's also taxed in the U.S., you might be able to claim a
credit for those foreign taxes. This prevents double taxation and can reduce
your U.S. tax bill dollar-for-dollar.
What You CANNOT Deduct
To avoid confusion, here are
some common expenses that are NOT deductible for most people:
•
Personal living expenses (groceries, clothing,
haircuts)
•
Commuting costs to and from work
•
Life insurance premiums
•
Most legal fees (unless they're business-related)
•
Club dues (social, country clubs)
•
Political contributions
Record-Keeping Tips
Good records are essential for
claiming deductions. Here's what I recommend:
1.
Keep all receipts for deductible expenses
2.
Use a dedicated folder (physical or digital) for tax
documents
3.
Track mileage if you drive for medical appointments or
volunteer work
4.
Save all tax forms you receive (W-2, 1099, 1098, etc.)
5.
Keep records for at least 3 years (the IRS can audit
returns going back 3 years)
Should You Hire a Tax Professional?
For your first tax year in the
U.S., I often recommend working with a tax professional or visiting a VITA
(Volunteer Income Tax Assistance) center. Here's why:
•
U.S. tax laws are complex, especially for newcomers
•
Tax treaties and foreign income add complications
•
A professional can ensure you claim all eligible
deductions
•
You'll learn the process and can potentially do it
yourself next year
VITA centers offer free tax
help for people earning less than $67,000. They're staffed by IRS-certified
volunteers and are specifically trained to help newcomers and non-English
speakers.
My Final Advice
Don't leave money on the table!
Tax deductions exist to help you keep more of your hard-earned money. As a
newcomer to the U.S., you might be eligible for deductions you didn't even know
existed.
Start by taking the standard
deduction—it's simple and often the best choice. Then, look into the
above-the-line deductions like student loan interest, IRA contributions, and
HSA contributions. These can be claimed in addition to the standard deduction!
If you have significant medical
expenses, own a home, or made large charitable donations, calculate whether
itemizing would save you more money. When in doubt, use tax software or talk to
a professional—many offer free consultations.
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