When preparing your taxes, it’s easy to overlook deductions that can save you money. However, by reviewing your tax situation, you may find deductions that can significantly reduce your tax bill. When itemizing deductions, it’s essential to be aware of all the possible deductions that may apply to your situation. Here are six commonly overlooked tax deductions that you should be aware of:
1. Disability tax credits
Disabled individuals can claim the disability tax credit to reduce their taxes. You might qualify for this tax credit if you have a severe and prolonged mental or physical impairment. The amount of the credit varies, depending on your income and filing status. This is an often overlooked tax deduction that you should investigate if you are eligible. In some cases, you may also be able to claim a caregiver credit as well.
2. Charitable and political donations
Donations made to qualified 501(c)(3) charities can be deducted from your taxes. Make sure to keep a record of all donations made, including the charity’s name and address and the donation’s date and amount. Political donations can also be deducted if they don’t exceed certain amounts. These deductions are commonly overlooked, so don’t miss out on them. Otherwise, you might risk underpaying your taxes.
3. Child and dependent care tax credit
This tax credit is available for people who pay for childcare, such as daycare or babysitting. The amount of the credit is based on your income, filing status, and the number of children. Make sure to save all your receipts for childcare expenses you incur throughout the year and use them when filing your taxes. Like many other deductions, taxpayers often overlook this one, and in some cases, they can miss out on a considerable sum of money.
4. Medical expenses
Expenditure in medical care is often overlooked as a tax deduction, but in some cases, it can be deducted. This includes expenses for doctor visits, hospital stays, prescription drug costs, and lab tests that exceed 10 percent of your adjusted gross income.
5. Moving expenses
When relocating for work purposes, the moving expenses incurred can be deductible. The move must meet certain requirements to qualify, and you must also have been employed and have worked full-time for at least 39 weeks within the 12 months following your move. Expenses such as packing, travel, lodging, and temporary storage of household items are all deductible. This is another deduction that’s often overlooked, so make sure you don’t miss out on it.
6. Student loan interest
Student loans are a typical expense, yet many people are unaware that they can deduct the interest they pay on their loan payments. For instance, when you pay off student loans, you can tax up to $2,500.00 of the interest you paid on those loans. It is such a significant tax break that it should not be overlooked. If you’re in doubt, talk to an accountant or a financial advisor about it.
Overall, there are many deductions available to taxpayers that are often overlooked. Make sure you review all the possible credits and deductions you may qualify for to ensure you’re getting all the benefits available to you. Talk to a professional if you need help understanding these deductions and how they can benefit your situation. You don’t want to miss any deductions that could save you considerable sums of money.
