Save money on your taxes by making yourself aware of these 39 easily overlooked tax deductions.
The inevitable tax season is upon us once again. But it doesn’t have to feel like a post-holiday hangover. There are a lot of things you can do to make your filing process easier, and your refunds larger! One key strategy is to understand the various deductions and credits available to you. These financial benefits can help lower your tax liabilities and potentially increase your refunds when it’s time for income taxes.
The following list will serve as a reminder of some deductions you can easily overlook when you prepare your return. It’s not intended to be all-inclusive, nor applicable to everyone. The circumstances of your situation will determine whether you qualify.
A quick note before we dive in: we’re not going to be covering tax credit options in this guide, such as the child tax credit, the earned income tax credit, and others. While both tax credits and tax deductions will help you lower your income taxes due, we’re focusing on deductions in this guide.
Medical expenses if one of the biggest category of deductions you might be able to take. Many of these expenses just make sense, but a few are more surprising. And of course, this is not an exhaustive list; for more detailed guidance on deductible medical expenses, check out the current IRS guidance for medical deductions.
Health insurance premiums can take a big bite out of your budget, but they may also be tax-deductible. If you’re self-employed or have a side hustle, you might be able to deduct the cost of your insurance premiums as a business expense. Additionally, if you itemize your deductions, you can deduct health insurance premiums as a medical expense. However, this deduction is subject to a 7.5% adjusted gross income (AGI) threshold, meaning only the portion of your medical expenses that exceeds 7.5% of your AGI is deductible. This can provide some relief on your tax bill dollar, so be sure to keep track of your premiums.
If you or a loved one has received care for alcoholism or drug abuse in the last year, you’re probably not thinking about how their care affects your taxes. But it’s worth noting that the care might be deductible. Currently, the IRS allows you to classify alcohol or drug abuse treatment as medical expenses if it was inpatient care at a therapeutic center. Room and board fees are included in the list of deductible medical expenses, too.
Contact lenses, eye glasses, and hearing devices can all qualify as deductible expenses if they’re prescribed by your doctor. They’re qualified medical expenses, and you’ll need to list them on Schedule A of Form 104 when you file your taxes. Be sure to keep your receipts for these expenses, too.
Contraceptives like hormonal birth control pills can be deducted if they’re prescribed by a doctor. You can also deduct the costs you pay for condoms.
If you receive care or investigative testing inside a hospital during the year, those expenses qualify as deductible medical costs. For example, if you need surgery, the lab work you’d receive for your pre-op assessment, nursing care before and after surgery, and the surgery itself would all be deductible.
Abortion services are deductible on your taxes as long as you received a legal abortion.
It’s very common for someone to travel to see a specialist for a unique condition, from cancer to Lyme’s disease and many other diagnoses. If you drive to a treatment center, you can take the standard mileage deduction for the miles driven. You can also deduct expenses for lodging at a hotel or at a treatment center.
If you purchase pregnancy tests to determine if you are pregnant, you can add that expense to your total medical expenses for the year. Be sure to keep your receipts for these purchases.
If you buy specialized equipment for a disabled individual (yourself, your spouse, or your dependents), you may be able to deduct the associated expenses. For example, if you buy equipment to make your household more accessible for a wheelchair-bound loved one, those expenses can probably be deducted.
Expectant mothers can deduct the costs they pay for childbirth classes and lactation support as long the classes are related to obstetric care.
Expenses you pay for fertility treatment for you or your partner are tax deductible. This can include egg retrievals, in vitro fertilization, vasectomy reversal, egg or embryo storage, and more. Surrogacy expenses are not deductible, however.
The IRS allows a wide variety of deductions related to your job. Whether you work for yourself or a traditional employer, there may be deductions that you can take advantage of.
If you’re self-employed or a freelancer, don’t overlook the potential home office deduction for those expenses. To qualify, your workspace must be used regularly and exclusively for business purposes. This could be a dedicated home office, a studio, or even a garage. You have two options for calculating this deduction: the Simplified Option and the Actual Expenses method. The Simplified Option allows for a standard deduction of $5 per square foot of home office space, up to a maximum of $1,500. Alternatively, the Actual Expenses method requires you to track and document all expenses related to your home office, including mortgage interest, property taxes, insurance, and utilities. This can positively impact your tax savings, so it’s worth considering.
Looking for a new job can be costly, but some of those expenses may be tax-deductible. You can deduct expenses related to job searching, such as resume preparation, career counseling, and travel expenses for job interviews. However, these expenses must be incurred while looking for a job in the same field as your current or previous job. Additionally, you must itemize your deductions to claim this tax deduction. Keeping detailed records of your job search expenses can help you take advantage of this potential tax break.
Relocating for a new job can be expensive, but you may be able to deduct some of those moving expenses on your tax return. If you move for a new job, you can deduct transportation costs, storage fees, and lodging expenses related to the move. To qualify, the move must be closely related to the start of work at a new job location, and you must meet certain distance and time requirements. Specifically, your new job must be at least 50 miles farther from your old home than your old job was, and you must work full-time for at least 39 weeks during the first 12 months after the move. Itemizing your deductions is necessary to claim this tax deduction, so keep all receipts and records related to your move.
If you travel for your work, then the expenses you incur may qualify as tax deductions. For example, let’s say that you fly to speak at a conference, and when you arrive, your tux or dress is wrinkled or dirty, so you have it dry cleaned. You keep the receipt so you can deduct it on your taxes. If you incur similar expenses often, these deductions could make a big difference on your tax bill.
If you have a cell phone that you use exclusively for business, you can deduct the costs associated with acquiring and maintaining that business line. You may also be able to deduct the business use of a personal cell phone. That said, if you go that route, you’ll need to keep a careful record of the times you used the phone for business and personal use. That way you’d be able to calculate a percentage of the business costs. You cannot deduct cell phone bills for personal use.
If you buy a home computer to use for work, you can deduct that cost on your taxes. Depending on the investment, you can deduct the cost all at once in the same year or amortize the expense over the course of several years while the computer depreciates in value. Determining which deduction will be best for you can be a bit tricky, so it’s recommended to chat through this with a tax professional.
If you’re in a union, you can actually can deduct the costs of your labor union dues on your tax return.
It’s very common to attend seminars or take classes for continuing education that’s mandated by the federal government, the state, or even your employer. These courses can be pretty expensive, but the good news is you can deduct the costs you pay for continuing education.
If you buy and use PPE for work, those expenses are usually deductible. This can include masks, gloves, hazmat suits, and more.
Much like you can deduct expenses for continuing education, you can deduct the subscription fee you pay to a medical journal. This could be a medical journal for a physical therapist, a science journal for an engineer, and so much more.
If you’re an employee in a high-risk industry, you might carry personal liability insurance to help protect yourself in wrongful acts cases. These insurance premiums may be deductible expenses.
Disabled workers may need to make additional purchases to buy equipment and accommodations to enable them to work effectively. Those costs are tax deductible. Just be sure that you can prove that they’re expenses for work
Paying self-employment tax can feel like a burden, but keep in mind that you can deduct some of those expenses. Currently, the IRS allows you to deduct 50% of all the self-employment taxes that you pay for the year.
Small business owners can often take advantage of the qualified business income deduction, which allows them to deduct up to 20% of their qualifying business income on their personal tax returns. This deduction can be taken regardless of whether you itemize or take the standard deduction.
Work and healthcare are two of the biggest categories for tax deductions, but there are lots of others available to you. Here are some common key tax breaks.
Paying off student loans can be a long-term financial burden, but the interest you pay on those loans may be tax-deductible. The Student Loan Interest Deduction allows you to deduct up to $2,500 of interest paid on qualified student loans. To qualify, the loan must have been used to pay for education expenses, and you must be the borrower or the borrower’s spouse. Additionally, your adjusted gross income (AGI) must be below a certain threshold, which varies depending on your filing status. This deduction can help reduce your taxable income, making it a valuable benefit for those repaying student loans.
If you hire an accountant to help you prepare your tax return each year, then don’t forget that these tax preparation fees are deductible. Odds are your tax preparer will make this deduction for you, but be sure to check for it (especially if it’s a substantial fee). You can also deduct the fees you pay for tax help during an IRS audit, too.
Bond investors who buy bond premiums can opt to deduct the excess price of their bond(s) over time, called amortization. In some cases, this amortization can help offset the interest that the bond earns, reducing the taxpayer’s tax bill overall. To use this deduction, the IRS requires you to calculate the bond premium using the constant yield method.
In some cases, you’re allowed to deduct the costs you pay for appraisals. For example, if you’re going to donate a piece of art as part of your yearly charitable contributions, you’ll need to have the art appraised to know how much you can deduct. The cost of that appraisal is deductible, too. Similarly, if you’re hoping to deduct casualty losses incurred during the year, you can deduct the cost of appraising that loss.
If you sell property during the year, you can deduct the costs you pay for commissions and closing fees related to that sale.
No one wants to miss a mortgage payment, but sometimes, it happens. Just remember that at tax time, you can deduct the extra money you paid in late fees or penalties on your taxes for the year. You can also deduct any prepayment penalties you incur.
Not all home improvements are deductible, but they become deductible if they meet the IRS criteria of capital improvements. Capital improvements must enhance your home’s overall value, prolong its useful life, and adapt it to new uses. Under this definition, a simple faucet repair wouldn’t qualify as a deductible expense. However, a full-scale kitchen remodel might. You can also deduct the cost of lead paint removal, too. Please chat with a tax professional for personalized guidance about your home improvement deductions.
If you pay tuition and fees for an eligible student (yourself, your spouse, or a dependent), then you’ll probably be eligible to deduct those expenses on your tax return this year. There are certain expenses, such as room and board that don’t qualify. Non-credit courses are usually not deductible unless they’re a prescribed part of the degree program.
Whether you’re saving for retirement or investing to grow your finances, there’s a good chance you’re paying some form of advisor fee. Those fees could be big or small, but they are deductible on your taxes.
Paying foreign taxes isn’t a common experience for a lot of taxpayers, so you might not be expecting to get a tax break for any foreign taxes you pay. But the IRS allows you to take those taxes as a deduction or a credit. For most people, the IRS recommends taking this tax break as a credit. But if you aren’t sure which option is best for your unique scenario, it’s recommended to talk to a tax professional.
Most taxpayers will pay state taxes on at least some form of personal property such as their car or their house. You can deduct these taxes on Schedule A of Form 1040. But keep in mind that the IRS limits this deduction to $10,000 per year. If you pay more than that in state property taxes, you won’t be able to deduct the taxes paid over that $10,000 threshold.
There are a variety of deductions you can make related to charitable contributions. Of course, there are deductions you can make for monetary donations. but you can also deduct the appreciation of property you donate to a charity as well. If you volunteer and help a charity, then you can deduct the out-of-pocket expenses you pay to participate in charitable activities, including the standard mileage deduction for any drive time.
If natural disaster struck and caused destruction of your property (called a casualty by the IRS), or some of your property was stolen (theft), you may be able to deduct that loss on your taxes. Generally speaking, the amount you can deduct will be impacted by the insurance reimbursement you receive for that loss. Additionally, for tax years between 2018 and 2025, individual taxpayers may only deduct loss related to theft if it was for a transaction that they entered into for profit. If you have questions about deducting for theft or casualties, please consult with a tax professional.
By keeping these often-overlooked tax deductions in mind, you can help maximize your potential savings and make tax season less stressful. While not every deduction will apply to your unique situation, reviewing these options (and others) and consulting a tax professional can help you make the most of what’s available. Stay organized, keep detailed records, and ensure you’re claiming every deduction you’re entitled to. A little extra effort now could mean a bigger refund — or a smaller tax bill — later.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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