Most taxpayers leave money on the table every year. Learn the most commonly missed deductions and credits for individuals.
I see it every tax season. Someone comes in confident they have claimed everything, and by the time we finish reviewing their situation, we find two or three deductions they never knew existed. It adds up.
Here are the categories I check first when reviewing a return.
Student loan interest is one of the most overlooked deductions. You can deduct up to $2,500 per year even if you do not itemize. Many recent graduates assume they cannot deduct it because they take the standard deduction. That is not how this one works.
If you are a teacher, you can deduct up to $300 for out-of-pocket classroom supplies directly on your return. It is a small deduction but an easy one that gets skipped regularly.
Self-employed people have a lot of options. You can deduct the employer-equivalent portion of your self-employment tax, your health insurance premiums if you are not eligible for coverage through a spouse's plan, and contributions to a SEP-IRA or Solo 401(k). If you work from home for your own business, the home office deduction may also apply, and it can be substantial.
On the topic of credits versus deductions: a deduction reduces your taxable income. A credit reduces your actual tax bill dollar for dollar. Credits are more valuable. The Earned Income Tax Credit, the Child Tax Credit, the American Opportunity Credit for education expenses, and the Saver's Credit for retirement contributions are all worth understanding.
Charitable donations add up more than most people realize. Cash donations to qualified organizations are deductible if you itemize. But non-cash donations of clothing, furniture, and electronics are frequently overlooked. The IRS allows you to deduct the fair market value of donated items as long as you keep documentation.
If you had significant medical expenses in a given year, it is worth calculating whether you cross the 7.5 percent of adjusted gross income threshold. Many people dismiss this without running the numbers.
The most reliable way to make sure you are not leaving money behind is to work with someone who reviews your complete financial picture and not just your W-2. That is what we do at SureEdge Tax & Accounting. If you want to know whether you are claiming everything you should be, we are happy to take a look.