You work hard for your income Your Tax Bill each year so keeping more of what you earn simply makes sense.Beyond familiar tax write-offs like mortgage interest, medical bills, and charitable gifts, a range of lesser-known deductions also await discovery to save you big money this tax season.
Maximizing legal tax deductions both common and obscure can lead to major tax savings year after year.
Below uncover seven sneaky-good tax deductions hiding in the tax code you absolutely need to capitalize on when filing this year before the April deadline hits.
Work-Related Expenses
The IRS lets taxpayers deduct a wide variety of job-related expenditures beyond just uniform costs. Keep thorough records of qualifying work expenses throughout the year.
Continuing Education
Deduct up to $160 per work-related course taken to maintain or improve existing job skills. Includes seminars, classes, conferences, etc. Travel costs to these are also deductible.
Home Office
If you used a home office for administrative work for your job, calculate allowable deduction for the business use percentage of utilities, repairs, insurance and depreciation.
Job Hunting Costs
Even unemployed taxpayers can deduct costs of resume preparation, employment agency fees, and mileage for driving to interviews. These job hunting expenses are deductible as miscellaneous deductions.
State & Local Taxes
Don’t miss deductions for taxes paid to state and municipal governments all year. Attaching documentation for these as itemized deductions saves money.
Sales Tax Option
In states without income tax, taxpayers can take the IRS’s sales tax deduction option instead based on their state and income level using the IRS Sales Tax Deduction Calculator.
Personal Property Tax
While easy to overlook, taxes on vehicles, boats, RVs or other personal property qualify for Schedule A itemized deductions and are worth collecting documentation for.
Medical & Dental Costs
Taxpayers who itemize can deduct medical and dental expenses exceeding 7.5% of their adjusted gross income, including:
Health Insurance Premiums
Premiums paid for employer-sponsored, marketplace,
and private health insurance policies covering taxpayer, spouse, and dependents get counted toward the itemizable medical threshold.
Transportation Costs
Amounts paid for rides to doctor visits and medical procedures by taxi, bus, trains, as well as ambulance fees also qualify for inclusion as medical deductions.
Retiree Healthcare
For taxpayers 65 and over, private health insurance premiums are deductible without applying the 7.5% AGI threshold.
So retiree plans get a specific carve out favoring older filers.
Lesser-Known Tax Credits
Tax credits directly reduce taxes owed dollar-for-dollar, making them particularly valuable. Uncommon credits to maximize include:
Adoption Tax Credit
Filers can reduce tax due by up to $14,890 per child for qualified adoption expenses, including adoption fees, court costs, and attorney fees Your Tax Bill.
Plug-In Electric Vehicle Credit
Purchasing a qualifying electric vehicle in 2022 could score you up to a $7,500 credit.
The car must feature at least a 7 kWh battery capacity and meet other requirements.
Premium Tax Credit
Lower-income taxpayers purchasing health insurance through federal or state marketplaces may receive credits reducing premiums and/or deductibles that apply at tax time.
Maxing Out Retirement Savings
Besides slashing taxable income now, supercharging retirement accounts can unlock future deductions down the road:
Self-Employed Plans
Sole proprietors and unincorporated businesses can open and contribute up to 25% of compensation pretax into Solo 401(k) plans, unlocking massive future tax savings Your Tax Bill.
Catch-Up Contributions
Taxpayers 50 and older can make $1,000 extra “catch up” contributions beyond normal limits to 401(k)s and IRAs for enhanced deductions.
Early IRA Withdrawals
Taxpayers can take IRA withdrawals before age 60 free of 10% penalty in special cases like using up to $10,000 toward first home purchase expenses.
Carefully hunting for every deduction and credit opportunity when filing this tax season ensures you maximize write-offs and retain more of your hard-earned money Your Tax Bill.
Consult a tax professional to identify the best ways to leverage both common and hidden tax-slashing deductions based on your unique financial situation each year.
