8 Overlooked Tax Deductions That Will Save You Money

Benjamin Franklin once claimed that “nothing is certain except death and taxes.” But while taxes are 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 throughout the year and during tax season. But it’s often tricky to know which deductions apply, and which ones you might be missing. With a bit of research and planning, 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 an online search tool to determine if the charities are tax-exempt, and then acquire letters of acknowledgment from each charity. You can claim donations between 20% and 50% of your adjusted gross income. Use the Schedule A form (Form 1040) to itemize your charitable contributions.

Educator Expenses

Teachers can deduct up to $300 annually for classroom supplies. 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. Once done, you can add your losses as a deductible by listing them on the Schedule A form. Remember that the amount you deduct cannot 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 salary. Check the income guidelines to see if you are 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. In other words, if you earn $100,000, you won’t be eligible to deduct the first $7,500 of medical bills, but you are eligible to deduct anything more. This includes copays, hospital care, prescription drugs, and other costs associated with healthcare. 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 up to the first $750,000 of mortgage debt, or $1 million, if you bought your home before December 16, 2017. If you’re married and filing separately, you can only claim $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 without assistance from an outside employer. Anyone who earns between $400 and $160,200 under their own employment is subject to this tax and must mark it accordingly when filing their taxes. You can write off half of that 15.3% (7.65%) each tax season as a deductible. 

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