Hopefully, you’ve already gotten your information to your tax accountant. On the off-chance you haven’t, or if you’re planning on addressing your taxes yourself, here are a few of the less-common deductions you might wish to keep in mind. Please note that these are just general summaries, and you would be well-served to consult with the IRS’ website (www.irs.gov) to make sure you qualify before claiming any of these deductions.
1) Charitable gifts
Most people know about deducting financial donations, or getting a receipt from
Goodwill. However, you can also deduct the cost of the supplies for baking a lasagna
for your church’s charity potluck as well.
2) Child/Dependent care fees
You can claim preschool tuition and summer day camps in addition to babysitters
and nannies for your dependents under the age of 13 or any dependent with a
disability. A note, though: you cannot deduct your spouse, the child’s parent, or
one of your children or dependents under the age of 19.
3) Education no matter your age
The American Opportunity Tax Credit allows you to claim the first $2000 you
spent on tuition, books, school fees, and required equipment, plus s25% of the
next $2000, for a total of $2500. Please note that equipment does not include
living expenses or transportation costs. And the Lifetime Learning Credit
allows you to claim 20% of the first $10,000 you paid toward tuition and fees,
for up to $2000.
4) Self-employed Social Security
A self-employed worker has to pay both the employee and employer portions of Social
Security, which totals 15.3%. However, you can deduct the “employer” portion of
that, which is 7.65% of the income.
5) Student loan interest
You can deduct up to $2,500 per year of interest paid on qualified student
loans in 2023—unless you’re married filing separately, if you’re a dependent on
someone else’s return, or if you earn more than a certain amount.
6) Home improvement renovations
The energy efficiency tax credit allows you
to deduct up to $3200 on qualifying home upgrades, such as energy-efficient doors,
windows, and heating units.
7) Jury duty pay
Some employers will require you to hand
over your jury pay, if you were still paid your regular salary while serving
jury duty. If that happens, you can deduct what you turned over to your
employer.
8) Retirement savings contribution
Not only aren’t contributions to traditional IRAs and 401(k)s not taxes, but
eligible filers can also claim a tax credit worth up to $2000 for single
filers. To meet the eligibility criteria for this extra level, you must have contributed
more than $73,00 for joint filers, $54,750 for head of household filers, and
$36,500 for all other filers.
9) Gambling losses
Of course, this assumes you won. Gambling and lottery winners can reduce their
liability by deducting their gambling losses: scratch-off costs, casino gambling
losses, and betting losses. And you aren’t allowed to deduct more than you won.
10) State and local taxes
While only available to those who itemize deductions, this allows you to deduct
up to $10,000 ($5,000 if married and filing separately), for state income taxes
OR state and local sales taxes (not both), property taxes and real estate
taxes.
11) Mortgage points
Most people know they can deduct mortgage
interest. However, if you itemize, you can also deduct mortgage points. Other
names for this are oan origination fees, maximum loan charges, loan discount, and
discount points. The IRS has very specific rules about who can deduct mortgage
points and who can’t, but there is an interactive worksheet on the IRS site to
help you decide if you can deduct the points.
12) Moving expenses for members of the Armed Forces
For service-related relocation, members of the Armed Foirces can deduct their
moving expenses.
13) Solar Tax Credit
You can get up to 30% of the installation cost of solar energy systems in your
home, both panels and water heaters.
14) Electric Vehicles Credit
Depending on the type of vehicle purchased, you can get a credit of between
$3750 and $7500, and a credit of up to $4000 for used vehicles.
We do recommend that you consult with a tax professional, of
course, as they will be familiar with all the small print involved in these deductions. If you need more information, please feel free to reach out to us.
