8 Surprising Tax Deductions You Don’t Want to Miss This Year
Filing your taxes might give you anxiety, but online tools and programs have made it easier than ever to zip through the process while earning you your maximum refund. Not only do they cover tax credits and help you prevent making mistakes, but they guide you through deductions you can take to ensure you get the most money possible back.
“Deductions are especially important because they can help reduce your taxable income, which in turn reduces how much taxes you owe,” TurboTax CPA Lisa Greene-Lewis explains. “Although they’re not a dollar-for-dollar reduction of taxes owed, there are deductions available for things you do in your every day life, like donating to charity, paying student loan interest, or contributing to your retirement. Make sure you are taking the ones you are eligible for so you get back every dollar you deserve.” Greene-Lewis suggests paying special attention to this year’s most surprising deductions and gave us eight to look out for.
1. Tuition: Are you a full-time student? If so, be sure to document your tuition costs. If you take just a class or two, there may still be savings for you. “Even casual learners can get a tax credit,” Greene-Lewis notes. “The Lifetime Learning Credit of 20 percent of up to $10,000 of tuition and fees is available even if you aren’t pursuing a degree.”
2.Health Insurance: Self-employed lady bosses and side hustlers take note: Your pricy health insurance premiums are eligible for a deduction. Greene-Lewis adds, “If you work for someone else, your health insurance premiums (paid after taxes) and other medical expenses are tax deductible if they exceed 7.5 percent of your income and you itemize your deductions.”
3. Home Office: Another major benefit for the self-employed is the ability to deduct part of your rent if you work from home. “If you use part of your home regularly and exclusively to perform administrative or managerial activities for your business, you can claim a home office deduction for a portion of utilities, rent, mortgage interest, depreciation, cleaning, and the like based on the square footage of your home used for your business,” Greene-Lewis explains.
4. Charitable Contributions: Small cash donations add up, and they all count come tax time. “It’s easy to forget the smaller amounts you contributed to various walks or races, but they add up quickly,” Greene-Lewis reminds. “You can’t deduct the value of your time when you volunteer, but you can deduct your travel at 14 cents per mile as well as any parking and tolls you paid.” Don’t fret about the math if you’re filing on your own; tools can help you accurately value and track your charitable contributions for the year and transfer them to you.
5. Personal Bad Debts: Life happens, and you might have lost some money by lending it to a friend or significant other — before they skipped town or you broke up, leaving you down and out. Sound familiar? Greene-Lewis says you can actually claim up to $3,000 on your return. “Claim this non-business bad debt as a short-term capital loss the year the debt becomes uncollectible,” she instructs.
6. Sales and Local Tax Deduction: It may come as a surprise, but you’re allowed to deduct either the state income tax paid or the state sales tax paid last year if you itemize your tax deductions. “You’re free to choose the one that gives you the biggest tax deduction,” Green-Lewis shares.
7. Camp for Your Kids: “You might be entitled to the Child and Dependent Care Credit if your children are under the age of 13 and you took them to a before and after school care program, daycare, or day camp so you can work,” Greene-Lewis says. Unfortunately, overnight and sleepover camps don’t fall in line with the requirements for the deduction.
8. Points Paid on a Home Loan: Homeowners rejoice! “If you paid mortgage points, also known as discount points, when you bought your home, they’re deductible for that year,” Greene-Lewis says. “Points paid to refinance a loan must be written off over the length of the loan, so don’t forget to write off the remaining points in the year you refinance, if you do.”
RELATED: The Millennial’s Guide to Doing Your Taxes
(Photo via Getty)
