Don’t Miss out on these Commonly Missed Tax Deductions
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Most people know there are certain things you can deduct from your taxes, like charitable donations or business expenses.
But did you know that there are a number of other deductions that are often missed when filing your income taxes?
In fact, many people end up overpaying their taxes each year because they don’t take advantage of all the deductions available to them.
Here are some of the most commonly missed tax deductions:
Home office deduction
The home office deduction is often missed because it can be a little complicated to calculate. But it’s worth taking the time to do it right, because the deduction can save you a lot of money on your taxes.
The home office deduction is available to taxpayers who use part of their home exclusively and regularly for business purposes. This could include working from home, running a business out of your house, or using a separate room in your house as an office.
To claim the home office deduction, you need to figure out how much of your home is used for business and then multiply that by the percentage of your mortgage or rent that is related to business use. You can also deduct expenses like utilities, insurance, and repairs that are related to the use of your home office.
Medical expense and dental expenses:
You can deduct any medical or dental expenses that are not covered by insurance. This includes things like doctor’s visits, prescriptions, therapy, and more. It doesn’t matter if you paid cash or through insurance; just make sure you choose itemized deductions.
If you’re self-employed, you may be able to deduct these costs even if you have health insurance. Check with your accountant to see what rules apply to you.
Student loan interest
If you have student loans, you can deduct the interest you paid on them in the last year. You are able to deduct up to $2,500 in student loan interest.
Related: Paying Off Student Loans: The Best Approach
Charitable donations
Did you know that you can deduct charitable donations from your taxes?
There are a number of reasons why people miss this deduction. For one, it can be a little complicated to figure out how much you can deduct. And secondly, people often don’t think of donating as a tax deduction. They think of it more as a way to help others in need.
But the truth is, donating to charity can save you a lot of money on your taxes. So if you haven’t been taking advantage of this deduction, now is the time to start!
Related: How to Get the Most for Selling & Donating Your Stuff
Self-employment taxes
If you are self-employed, you may be able to deduct some of your self-employment taxes from your taxes.
This includes 50% of the tax you pay toward Social Security and Medicare taxes.
The deduction for self-employment taxes can save you a lot of money on your taxes, so it’s worth taking the time to figure out if you qualify for it.
State and local taxes
Did you know that you can deduct your state and local taxes from your federal taxes? So long as you itemize you can deduct state and local real estate and property taxes.
So, if you live in a state with high taxes, this deduction can really help lower your tax bill.
Just be sure to keep track of all your receipts and records throughout the year.
Job-hunting costs
Did you know that you can deduct the costs of job-hunting from your federal taxes?
This includes things like travel costs, resume preparation, and even the cost of interviewing. However, it’s important to note this only for your current occupation. If you’re job hunting for a different occupation/career you won’t be able to deduct those costs.
So, if you’re looking for a new job this year, be sure to keep track of all your receipts and records. You may be able to get a nice tax break!
Summer Camps for Kids
If you have children, summer camp can be a significant expense. Fortunately, many summer camps offer tax-deductible tuition rates. This applies to day camps as they are considered to count as child and dependent care credit.
HSA contributions
If you have a health savings account (HSA), you can deduct the amount you contribute to it on your taxes. This deduction can be significant, especially if you max out your HSA contributions for the year.
Business Expenses
Did you know that business expenses can also be deducted from your taxes?
For example, if you run an online store or sell products at a flea market, you can deduct the cost of running your business.
You can deduct the cost of advertising, too. But remember, you must be able to prove that the advertising was actually used to promote your business.
In addition, you can deduct any other expenses related to your business. These include things like rent, utilities, supplies, and employee benefits.
And finally, there are certain types of business expenses that aren’t deductible. These include things like depreciation, interest, and insurance.
Bottom Line
It’s easy to overlook certain expenses when filing your taxes. But there are plenty of ways to save money on your taxes without having to make any changes to your lifestyle.
Remember: The sooner you file your tax return, the better off you’ll be. So take the time to do your research and find out which deductions you might be missing. Then, make sure you claim every single deduction you qualify for. It could mean a big difference in your overall tax refund.
Frequently Asked Questions
Still have some questions about commonly missed tax deductions? We’ve answered the most common questions below.
If you’re claiming a deduction of $300 or more, you’ll need to have documentation to support your claim. For smaller deductions, you can often estimate the amount and deduct it without receipts.
If you use part of your home exclusively for business purposes, you may be able to deduct a portion of your rent or mortgage, as well as other expenses like utilities and insurance.
If you use your car for business purposes, you can deduct a portion of your gas, maintenance, and insurance expenses. You’ll need to keep track of your mileage and receipts to claim this deduction.
The “0” withholding status means that the maximum amount of taxes will be withheld from your paycheck. This is ideal if you expect to owe taxes when you file your return.
The “1” withholding status means that a smaller amount of taxes will be withheld from your paycheck. This is ideal if you expect to get a refund when you file your return.
If you use your car for business purposes, you can deduct a portion of your gas expenses. You’ll need to keep track of your mileage and receipts to claim this deduction. There are lots of apps for your phone that can help you to track your mileage and store receipts.
You can deduct the cost of any office supplies that you use for your business. This includes things like pens, paper, ink, and toner. You’ll need to keep receipts for all of your purchases to claim this deduction.
You can deduct a wide variety of expenses as business expenses. This includes things like office supplies, advertising, travel, and entertainment. You’ll need to keep receipts for all of your expenses to claim this deduction.
If you’re self-employed, you can deduct a wide variety of expenses from your taxes. This includes things like office supplies, advertising, travel, and entertainment. You’ll need to keep receipts for all of your expenses to claim this deduction.
Yes, you can deduct the cost of your computer as a business expense. This includes both the purchase price and any associated costs like maintenance and repairs. You’ll need to keep receipts for all of your expenses to claim this deduction. Additionally, your computer must primarily be used for business.
