9 of the Absolute Best Tax Deductions You’re Missing out On
If you’re looking to save money come tax time, getting all of the deductions you qualify for is key. Click here to learn about 9 of the best tax deductions we’re willing to bet you’re missing out on!
Tax season can be a dreaded time of year. But with the average tax refund being between $2,200 and $3,200, it can also be a big payday for many.
But what if that refund could be even bigger for you? How do you know you’re receiving the best tax deductions on your returns each year?
Unfortunately, a lot of people miss out on deductions they are eligible for due to confusing rules. Or simply because they didn’t know the deduction even existed.
Let’s make sure that doesn’t happen to you next time. Instead, let’s discuss 9 of the best tax deductions that could save you even more money when tax season rolls back around.
1. Charitable Contributions and Gifts
It’s well known that you can deduct any monetary contribution you make to a charity, or the donations you give to the local thrift store, but it doesn’t just end there.
Lucky for your generous self, you can deduct any out of pocket costs you spent while doing the good deeds you love to do.
You know those brownies you baked for the school fundraiser? The ingredients and materials you used are tax deductible.
The old blankets you dropped off at the animal shelter? Yep, tax deductible.
Even the babysitter fees you paid for when you volunteered down at the local soup kitchen – tax deductible.
2. Sales Tax
The IRS will let you deduct either your state and local income tax or your state and local sales tax, but not both.
So, for states that do not have an imposed income tax, deducting the sales tax is the way to go.
But what about if you live in a state that does have an income tax? Then you have the option of choosing which one would work out best for your pocketbook.
And the IRS will help you figure out which one that is! It has calculators that can do the math for you, showing you whether the income tax deduction or the sales tax deduction would save you the most money.
Just make sure not to confuse sales tax with personal property tax. It’s best to have your particular property taxes explained by your accountant.
3. Student Loan Interest
For those who are legally liable for student loan debt, making those monthly payments will be a little easier come tax time.
Any student loan interest paid for the year is tax deductible, whether it’s itemized or taken in the standard deduction.
And even if your parents are the ones who made the payments. As long as you are not claimed as a dependent, the IRS will still allow you to deduct up to $2,500 in interest payments.
4. Self-Employed Social Security
Being self-employed definitely comes with so many benefits… and unfortunately some disadvantages.
One of those disadvantages is having to pay 15.3% of your income towards social security and Medicare taxes. That’s the part normally paid for by both the employer and employee.
However, there is a small silver lining that a lot of people don’t know about. You are allowed to deduct 7.65% of the employer portions off of your income taxes.
5. Job Hunting
The ordeal of job hunting can be made easier knowing you are allowed to deduct some of that out of pocket cost.
If you are job hunting in the same field as your previous job, and your expenses are over 2% of your adjusted gross income, you are able to take those itemized deductions.
And take includes mileage on your car, resume printing, any job placement agency fees, hotel costs, and anything else that is associated with your job hunt.
However, this does not apply if you are a first-time job hunter or looking for a job in a brand-new field.
6. Earned Income Tax Credit
Can you believe that 25% of eligible taxpayers miss out on the Earned Income Tax Credit because they either didn’t understand the rules or didn’t know they were eligible to begin with? What if one of those are you!
This tax credit is for low to middle-income families. The amount they get back depends on income, family, size, and marital status.
And good news if you do qualify for the credit but have missed out. You are able to claim the credit for up to three previous tax years.
7. Jury Duty Fees You Paid to Your Employer
If you’ve been called to fulfill your civic duty, chances are your employer will continue to pay you your full salary while you are on jury duty. However, they may then request that you hand over your jury fees once it is all said and done with.
But the IRS wants you to report those fees as taxable income. So, if you do hand over the jury fees to your employer, you have a right to deduct that money from your taxes.
8. Health Insurance Premiums
Medical expenses can be a huge blow to any budget. And if your expenses totaled over 7.5% of your adjusted gross income, you can get a tax deduction when you claim an itemized medical deduction on your 2017 and 2018 taxes.
But are you self-employed and responsible for your own health insurance coverage? Then you’re in luck. You may be able to claim 100% of your health insurance premium costs off of your adjusted gross income.
9. IRA Deductions
Do you contribute to a Traditional IRA? If so, you may be eligible for a tax deduction!
Although Roth IRA’s aren’t tax-deductible, traditional ones are when you meet certain criteria. If you want to deduct the amount you invest, it is worth checking into the criteria that follows age, contribution amount, marital status, and whether you have a retirement set up through your employer.
The Best Tax Deductions Can Save You A Lot of Money
Now that you know what the best tax deductions are and which ones you may have been missing, tax season won’t seem near as scary next time it rolls around.
Plus, it can help you pay off any debt you may have! Click here to find out more about debt relief and how it affects your credit.