8 Overlooked Tax Deductions That Will Save You Money

Benjamin Franklin once claimed that “nothing can be said to be certain, except death and taxes.” And while taxes are indeed unavoidable, you might not need to pay the IRS as much as you have been: The tax code is full of potential deductions that could help you save money.

It can be tricky to know which deductions apply and which ones you might be missing. With a bit of research and planning, though, you can potentially save thousands of dollars each tax season. Here are some overlooked tax deductions that you might be eligible to claim.

Charitable Contributions

If you volunteered or donated to a tax-exempt organization this past year, you may be eligible to claim that charitable gift on your taxes. Keep a running list of your donations, use the IRS’ online search tool to determine if the charities are tax-exempt, and then acquire letters of acknowledgment from each charity. Generally, your deduction can’t exceed 60% of your adjusted gross income, and there may be different limits depending on the type of donation. Use the Schedule A form (Form 1040) to itemize your charitable contributions.

Educator Expenses

Eligible teachers can deduct up to $300 annually for things like classroom supplies and professional development courses. Save your receipts and claim this deduction on Form 1040 while filing your taxes.

Gambling Losses

You can deduct legal gambling losses by keeping an accurate yearly record of your total wins and losses. First, report your total gambling winnings to the IRS. Then you can add your losses as a deductible by listing them on the Schedule A form. Just remember that the amount you deduct can’t exceed your total gambling winnings.

IRA Contributions

If you have an IRA, you can deduct your annual contributions up to a certain amount, depending on factors such as your income. Check the income guidelines to see if you’re eligible for this deductible.

Jury Pay

Many employers require their employees to turn over any money paid by the court when they serve jury duty. You can deduct the amount you give your employer on Form 1040.

Medical Expenses

If your yearly medical expenses total more than 7.5% of your adjusted gross income, you can deduct any excess amount on your taxes. For example, if you earn $100,000, you won’t be eligible to deduct the first $7,500 of medical bills, but you can deduct anything more than that. This includes copays, hospital care, prescription drugs, and more. List them under your itemized deductions on your Schedule A form.

Mortgage Interest

Homeownership has a high financial barrier to entry, but it can be made more accessible thanks to the mortgage interest tax deduction. This deduction covers interest paid on the first $750,000 of mortgage debt (or, if you bought your home before December 16, 2017, the first $1 million). If you’re married and filing separately, you can only claim interest paid on $375,000 on your individual taxes, which amounts to $750,000.

Social Security Taxes

Self-employed people and small-business owners are subject to quarterly tax payments — including a requirement to pay the maximum 15.3% of Social Security and Medicare taxes. Anyone who earns a net income between $400 and $184,500 under their own employment is subject to these taxes and must mark them accordingly when filing. Thankfully, you can write off half of your Social Security taxes as a deductible using Form 1040. 

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