When filing a tax return, many focus on the obvious deductions and end up overlooking others that could reduce their taxable income. While not every deduction applies to every taxpayer, being aware of commonly missed deductions can help ensure your return is accurate and complete. Below are 10 commonly missed tax deductions people often overlook.
1. State and Local Sales axes
If you don’t deduct state income taxes, you may be able to deduct state and local taxes instead. This can be helpful for individuals living in states without income taxes or for those who made large purchases during the year.
2. Charitable Contributions (Cash and Non-Cash)
Many people remember cash donations but forget about
- Donated clothing or household items
- Mileage driven for charitable purposes
** Proper documentation is important for all charitable deductions.
3. Medical Expenses (Above the Threshold)
Certain medical expenses may be deductible if they exceed the IRS income threshold. These can include out-of-pocket costs such as prescriptions, medical equipment, and travel related medical care.
4. Student Loan Interest
You may be able to deduct student loan interest paid during the year, even if you don’t itemize deductions. Keep in mind that Income limits apply.
5. Educator Expenses
Eligible educators may deduct qualified classroom expenses paid out of pocket. This includes supplies, books and certain educational materials.
6. Job Search Expenses (Limited Situations)
In specific circumstances, job-related expenses may be deductible. This typically applies when expenses are directly tied to maintaining or improving skills in your current profession.
7. Self-Employment Expenses
Self-employed individuals often miss deductions related to:
- Business mileage
- Home office use
- Software, tools, and professional services
** Tracking expenses throughout the year can make a significant difference come tax time.
8. Health Savings Account (HSA) Contributions
Contributions made to a Health Savings Account, even outside of payroll deductions, may be deductible. This is commonly missed when contributions are made directly rather than through an employer.
9. Investment Fees and Related Costs
Certain investment-related expenses may be deductible depending on how investments are structured and reported
10. Retirement Contributions
Contributions to qualifying retirement accounts may reduce taxable income. Some taxpayers miss this deduction, especially if contributions were made close to the filing deadline.
Final Thoughts
Not every deduction applies to every taxpayer and tax rules can change from year to year. However, understanding commonly missed deductions can ultimately help reduce errors and ensure your return reflects your full financial picture.
Also, keep in mind that these are just 10 commonly missed tax deductions and that others do exist. If you are unsure whether a deduction applies to you, please don’t hesitate to reach out to me and have your tax documents reviewed at no cost.
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