Tax season can be a stressful time for many individuals, as they scramble to gather receipts and documents to claim the most substantial deductions possible. While most people are aware of common deductions like mortgage interest and charitable donations, there are numerous overlooked tax deductions that could significantly reduce your tax burden. In this blog, we will explore ten lesser-known tax deductions that you might not be claiming, enabling you to maximize your savings and keep more money in your pocket.
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State Sales Taxes
If you live in a state without income tax, or if you made substantial purchases like a car or a boat, you might be eligible to deduct state sales taxes on your federal return. You can either claim the actual sales taxes paid or use the IRS’s optional sales tax tables based on your income and the state you reside in.
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Job-Hunting Expenses
If you were on the hunt for a new job within the same profession last year, you may be able to deduct job search expenses. Costs such as resume preparation, career counseling, and travel expenses incurred during job interviews can be eligible for deduction.
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Educator Expenses
Teachers who use their own money to buy classroom supplies can deduct up to $250 for these expenses. This deduction applies to both primary and secondary school teachers, allowing them to recoup some of their out-of-pocket expenses.
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Moving Expenses
While the Tax Cuts and Jobs Act suspended the deduction for most job-related moving expenses, certain exceptions still exist. If you’re an active-duty member of the military or had to move for work before 2021, you may be able to claim these expenses.
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Health Savings Account (HSA) Contributions
Contributions made to an HSA are tax-deductible, and the earnings on the account are tax-free when used for qualified medical expenses. If you had an HSA last year, don’t forget to include the contributions in your deductions.
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Energy-Efficient Home Improvements
If you made energy-efficient upgrades to your home, such as installing solar panels or energy-efficient windows, you might be eligible for tax credits or deductions. These environmentally-friendly improvements can help you save money while saving the planet.
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Student Loan Interest Paid by Parents
If your parents are repaying your student loans and you are no longer claimed as a dependent on their tax return, they can transfer the deduction for the student loan interest paid to you, potentially saving you hundreds of dollars.
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Gambling Losses
While gambling winnings are taxable, you can deduct gambling losses up to the amount of your winnings. Be sure to keep detailed records of your losses, including receipts and tickets, to support your deduction claim.
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Home Office Deduction
If you work from home and use a portion of your home exclusively for business purposes, you may qualify for the home office deduction. This deduction allows you to write off a percentage of your home-related expenses, such as utilities and insurance.
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Jury Duty Pay
If your employer required you to return your jury duty pay to them but did not adjust your W-2, you can deduct the jury duty pay from your income, reducing your tax liability.
Conclusion:
As you prepare your tax return, don’t overlook these often-forgotten deductions that can lead to significant tax savings. From state sales taxes and job-hunting expenses to home office deductions and student loan interest, understanding and claiming these deductions can make a substantial difference in your tax liability. Consult with a tax professional or use reputable tax software to ensure you maximize your deductions and keep more of your hard-earned money. Remember, being diligent with your tax deductions can turn tax season from a burden into an opportunity to increase your savings.