Claiming as many of the credits you’re eligible for means more money in your pocket at the end of the day, and you could be missing out if you don’t know what to look for. This tax deduction checklist can help you keep track of credits you may qualify for, especially if you’re doing your taxes yourself. Here are some commonly overlooked tax deductions and credits to watch for this upcoming tax season.
Medical
Many medical expenses are potentially tax-deductible for those who qualify. “When it comes to the medical expense deduction, if you can claim itemized deductions, meaning your deductions for things like home mortgage interest and property taxes are more than the standard deduction ($12,550 if single, $25,100 if married filing jointly), then you can claim your medical expenses that are more than 7.5 percent of your adjusted gross income,” explains Lisa Greene-Lewis, CPA and tax expert at TurboTax. If you are able to deduct the entirety of your medical expensive, save your receipts for the following:
Health insurance premiums. For self-employed people, medical insurance premiums are tax-deductible, even for those who can’t claim itemized deductions. Personal protection equipment (PPE) Transportation expenses for doctor’s visits. Sixteen cents per mile can be claimed for trips to medical facilities or doctors’ offices. Nursing home medical expenses Acupuncture, chiropractor Hearing aids, orthopedic shoes, eyeglasses, contact lenses, laser surgery Equipment for disabled individuals like wheelchairs, crutches, etc. Alcohol and drug addiction programs and smoking cessation programs Nurses’ fees Weight-loss programs prescribed by a doctor
Business
Don’t overlook these business-related tax deductions—especially if you’re self-employed. “Self-employed [people] often are hesitant and overlook deductions for their business,” says Greene-Lewis. As long as the expenses are directly related to your business, you should be able to claim tax credits for things such as your home office, utilities, and gas mileage. Similarly, if you use a credit card for your business, you can deduct the interest on these cards for qualified business expenses, says Washington. If you own a business, make sure you keep track of the following deductions:
Education expenses to maintain or improve job skillsCredit card interest for qualified business expensesJob-related professional journals and newspapersRequired uniformsUnion duesEmployment agency fees or commissionsHome office expenses (if you work from home). You can deduct a portion of your home expenses, such as mortgage interest, property taxes, rent, and utilities, based on the square footage of your office space.Car expenses. If you use your car for your business, you can either deduct 56 cents per mile or the actual expense based on how much you use it for business.Expenses for job-seeking in your current fieldReservist and National Guard overnight travel expensesCleaning and laundering services while traveling for businessCell phones required for business
Home
If you’re a homeowner, keep an eye out for deductions you qualify for beyond home mortgage interest. “Many may know about the deduction for home mortgage interest, but don’t forget that you can deduct points you paid to secure your loan,” says Greene-Lewis. “Some [other] overlooked tax deductions for your home include mortgage interest, home equity loan interest, property taxes, and medically necessary home improvements,” explains Washington. In addition to those loan-related expenses, you can also write off the following:
Commissions. You can deduct commissions for the sale of your home or rental management if you rent it outMoving expensesPersonal property taxes on cars, boats, etcCasualty and theft lossesHome improvements that are medically necessaryHousekeeping or other home services needed for a qualifying dependent during your work hours
Charitable
Under the American Rescue Plan, if you claim the standard deduction, you can now claim up to $300 for cash donations—$600 if you’re married and filing jointly. Some yearly donations might include:
Donated clothing or other goods. Simply note the estimated value on the receipt—Goodwill’s Valuation Guide is a great resource. Mileage incurred while performing charitable activities. You can claim 14 cents per mile if you volunteer for a 501(c)(3) organization. Volunteer costs. The cost of meals, accommodations, public transportation, and parking when volunteer work sends you far from home—if you pay for them out of your own pocket—are deductible.
Educational
Are you a student or a teacher? This one is for you. “As a grade K-12 educator, including counselors, principals, and aides, you may be able to deduct $250 for unreimbursed expenses (books, supplies, equipment, etc.) you incur during the school year,” says Washington. If you’re a student (or a parent with a college-going child), you could get a tax credit for college expenses. “You may be able to claim the American Opportunity Tax Credit for up to $2,500 per student for the first four years of college expenses,” explains Greene-Lewis. In addition to tuition and fees, books and supplies can be deducted as well. Note: The student has to be claimed as a dependent on their parents’ taxes in order for the parents to claim. If you’re a student or a teacher, look into the following tax credits and deductions:
Lifetime Learning credits. This is a type of federal financial aid for college tuition that gives tax credits instead of tuition payments and applies to courses that help gain or improve job skills. School-related expenses. If you paid for them as a K-12 educator and were not reimbursed (books, supplies, equipment), you can deduct incurred costs. American Opportunity Tax Credit for college expenses Student loan interest
Finances
Did you know you can get a tax credit just for investing in your 401K or IRA? “The IRS reports that one out of five people miss the credit—but it can be worth up to $2,000 married filing jointly or up to $1,000 single,” says Greene-Lewis. You can also get a bad debt deduction, if someone owes you a valid debt. “You can deduct a nonbusiness bad debt if you tried to get your money back,” explains Washington. These are bad debts that are not directly related to your business or profession. Other financial or investment-related tax deductions include:
Investment-related expenses Refinancing points on a mortgage Accounting or legal fees involved with taxes Cost of safe deposit box if used for investments or business Penalty on early withdrawal of savings Bad debt deduction Savers credit for investing in your 401k or IRA Alimony
Other
Here are some other claims you might qualify for:
Care provided for disabled children or a spouse (Child and Dependent Care Credit)Clean fuel credit if purchasing a hybrid carJury duty pay if reimbursed to your employerSome gambling losses
