With tax season around the corner, it’s a good time to start organizing your deductions. Whether or not you plan to take the standard deduction, itemizing first ensures that you’re making the most of your deduction opportunities.
While you work through the process, make sure not to overlook these 5 commonly missed tax deductions.
- Non-traditional medical expenses – It’s common knowledge that qualified medical expenses can be a big deduction for some, but did you know the IRS allows deductions of non-traditional medical expenses as well? This includes chiropractic care, acupuncture or other treatment for alcohol, drug, or smoking cessation. Additionally, transportation costs to and from necessary medical care, as well as certain medical conference fees can become deductible in the right circumstances. If you or your dependents have chronic illnesses or significant medical expenses, think about consulting an advisor who can help you identify all your qualifying medical expenses.
- Business use of a car – If you use your car for business purposes you may have deductions on the table. If your vehicle is used solely for business, you can often deduct the entire cost of the car. If you use your car for business and personal use, you may be able to deduct partial use costs. Make sure to keep documentation of deductible expenses, like gas and maintenance receipts. There are several apps you can use that will help you track and calculate your deductible mileage to simplify this process.
- State taxes – State income and sales taxes can be deducted from your taxable income and can make a big impact. Be aware that this in an either/or deduction. If your state has income taxes, that will probably be the way to go unless you made some significant purchases this year (car, boat, etc.) If your state does not have income tax, you can deduct the sales tax using receipts or the IRS Sales Tax Deduction Calculator.
- Home remodeling – Mortgage insurance is a common deduction, but did you know that you can also deduct some costs of home remodeling? Major renovations impact the value of your home and can be an investment in your property. If you have done major renovations, the sales tax on materials costs can be deductible. Be sure to keep records of these purchases and have them handy when you start your taxes.
- Education credits and deductions – Don’t miss out on deductions for qualifying education expenses. If you or any dependents are students, you might be eligible for the Lifetime Learning Credit or the American Opportunity Tax Credit. These can reduce the impact of significant secondary education tuition and expenses. If you or a dependent has student loans, you may be able to deduct the amount of student loan interest. Check out this tool to see if you qualify for student loan interest deductions.
Make the most of your income by maximizing your deductions this tax season. These are just a few of the commonly missed tax deductions you might be eligible for this year. For more help with your tax returns, be sure to consult a financial advisor.
