Are you looking to maximize your tax savings this year? In the rush to file your taxes, it’s easy to overlook potential deductions and credits that could save you money. From state and local taxes to mortgage interest and charitable contributions, there are many commonly overlooked tax deductions and credits that you should be aware of.
In this blog post, we’ll be discussing 10 overlooked tax deductions and credits that can help you keep more money in your pocket. Whether you’re a homeowner, self-employed, or have a family, these deductions and credits can help you save on your taxes. Make sure to consult with a tax professional or use tax preparation software to ensure that you’re taking advantage of all the deductions and credits for which you qualify.
10 Overlooked Tax Deductions and Credits
As tax season approaches, many people are scrambling to gather all the necessary documentation to file their taxes. However, in the rush to get everything done, it’s easy to overlook potential deductions and credits that could save you money. Here are 10 commonly overlooked tax deductions and credits that you should be aware of:
- State and Local Taxes – You can deduct state and local income, sales, and property taxes on your federal tax return. This includes taxes paid on your personal residence as well as any rental properties you own.
- Mortgage Interest – Homeowners can deduct the interest they pay on their mortgage, up to a certain limit. For mortgages taken out before December 15th, 2017, the limit is $1 million. For mortgages taken out after that date, the limit is $750,000.
- Charitable Contributions – Donations made to qualified charitable organizations are tax-deductible. This includes cash donations as well as the fair market value of any property or goods donated.
- Medical and Dental Expenses – Medical and dental expenses that exceed 7.5% of your adjusted gross income can be deducted. This includes things like doctor’s visits, prescription drugs, and even travel expenses related to medical treatment.
- Self-Employment Tax – If you’re self-employed, you can deduct the self-employment tax (Social Security and Medicare taxes) that you pay. This can add up to significant savings.
- Education Expenses – If you or a dependent are a student, you may be able to claim education-related tax deductions or credits. This can include things like tuition, fees, and even some room and board expenses.
- Retirement Savings Contributions – Contributions to a traditional IRA or 401(k) can be tax-deductible, up to certain limits. This can include contributions made by an employer as well as those made by the individual.
- Job Search Expenses – If you’re looking for a new job in the same field as your current or most recent job, you can deduct certain expenses associated with your job search. This can include things like resume printing and travel expenses.
- Child and Dependent Care Credit – If you pay for child care or care for a dependent while you’re working or looking for work, you may be able to claim a credit of up to 35% of your expenses.
- Sales Tax – You can choose to deduct either state and local income taxes or state and local sales taxes on your federal tax return. If you live in a state with no income tax, it may make more sense to choose the sales tax deduction.
It’s important to note that these tax deductions and credits are subject to change, so be sure to check the most current IRS guidelines. Additionally, consult a tax professional or use tax preparation software to ensure that you’re taking advantage of all the deductions and credits for which you qualify. By understanding these commonly overlooked tax deductions and credits, you can save money on your taxes and maximize your refund.
Tips on Filing Your Tax Deductions and Credits
Filing your taxes can be a daunting task, but by taking advantage of deductions and credits, you can lower your tax bill and increase your refund. Here are some tips to help you properly file your tax deductions and credits:
- Keep good records – Make sure to keep all receipts, bills, and other documentation related to your deductions and credits. This will make it easier for you to prove your deductions and credits to the IRS.
- Understand the requirements – Each deduction and credit has specific requirements that you must meet to qualify. Be sure to understand the requirements for each deduction and credit you plan to claim.
- Maximize your deductions – Take advantage of all the deductions and credits that you qualify for. This can include things like state and local taxes, mortgage interest, charitable contributions, and medical expenses.
- Use tax preparation software – Tax preparation software can help you navigate the deductions and credits that you qualify for, and can help you file your taxes accurately and efficiently.
- Consult with a tax professional – If you’re unsure about any aspect of your taxes, consider consulting with a tax professional. They can help you identify deductions and credits that you may have overlooked, and can help you file your taxes correctly.
- Take note of the deadlines – Be aware of the deadlines for filing your taxes and submitting your deductions and credits. The IRS has different deadlines for different forms and you don’t want to miss those.
- Claim your dependent – If you have dependents, make sure to claim them on your tax return. This can qualify you for additional deductions and credits.
- Get educated on your deductions – The IRS offers education tax benefits such as American opportunity credit and Lifetime Learning credit, and many people are unaware of these deductions.
By following these tips and taking advantage of deductions and credits, you can lower your tax bill and increase your refund.
Conclusion For Overlooked Tax Deductions and Credits
In conclusion, it’s important to be aware of all the potential tax deductions and credits that you qualify for. The tax code is complex and it’s easy to overlook deductions and credits that could save you money. By understanding commonly overlooked deductions and credits such as state and local taxes, mortgage interest, charitable contributions, and medical expenses, you can lower your tax bill and increase your refund.
Additionally, by following tips such as keeping good records, understanding the requirements, using tax preparation software, and consulting with a tax professional, you can ensure that you’re taking advantage of all the deductions and credits for which you qualify. Remember to also take note of the deadlines and claim your dependents to get the most money back. By being mindful of these overlooked deductions and credits, you can ensure that you’re not leaving any money on the table during tax season.