In just a few short months, tax season will be upon us! We know it’s tempting, but don’t take the easy way out this year. Chances are, you’ll end up losing a lot of hard-earned money. Although the reform on taxes in 2018 did change many popular write-offs, there are still plenty of deductions to take advantage of.

It just takes a little bit of research. The good news is, we’ve already done that for you. Here are 15 overlooked tax deductions to pay attention to below:
  


1. Reinvested dividends

This is a subtraction that can earn you some big savings. Unfortunately, it’s also one of the most missed by taxpayers. So how does it work? If you have mutual fund dividends that are automatically invested in additional shares, each reinvestment increases the stock or mutual fund, aka your “tax basis.” 

This lowers your taxable amount of capital gain when you sell these shares. It’s crucial to remember to include this in your cost basis or you’ll end up overpaying your taxes. 

Sound complicated? There are tools out there that can help you, like TurboTax Premier and Home & Business. 

2. Out-of-pocket charitable contributions 

Did you know you can write off things like food purchased for a soup kitchen or stamps purchased for a school fundraising event? Most people don’t miss the larger charitable donations they give throughout the year, but don’t forget, smaller donations add up too! You can also write off miles driven to do charitable work, including tolls and parking fees. 

3. Student loan interest paid by guardians

If you’re paying off your child’s student loans and not claiming them as a dependent, the IRS treats it as though you gave that money directly to your child. That means that students can deduct up to $2,500 of student loan interest paid by their parents if they qualify. They don’t have to itemize to utilize this either. 

4. Personal legal bills

Have legal bills? If your lawyer is pursuing taxable income on your behalf or working on the determination, collection, or refund of any tax, you may be able to deduct legal bills on Schedule A, line 23. This would count as a miscellaneous deduction subject to the 2% AGI floor. 

5. Losses due to theft or casualty 

If you’ve unfortunately dealt with losses due to vandalism, storm, fire, or theft this year, those items may be deductible. This also counts for car, boat, or other accidents! If you have money in a financial institution that was lost due to insolvency or bankruptcy of the institution, you may be able to deduct that as well. You must figure out how much you can deduct by completing Form 4684, Casualties and Thefts. 

Just keep in mind, there are three limits on the losses you can claim: 

  • If the money was reimbursed by insurance, it cannot be claimed 
  • Each occurrence must be more than $100
  • The total amount of all losses (reduced by $100 for each loss) must be greater than 10% of AGI 

6. Last year’s state income taxes

If you owed taxes last year and paid them this year, you can deduct them as an itemized deduction. You can also choose to deduct state general sales tax instead of deducting state income tax. If you go this route, you can include the sales tax on larger items like vehicles, boats, airplanes, or renovation materials. 

7. Moving expenses for military orders  

If you are in the military and must move due to orders, you can deduct the moving expenses incurred to make this transition. You can get this write-off even if you don’t itemize!

8. Dependent care tax credit

Did you know you can get additional support for childcare, even if you pay your childcare bills through a reimbursement account at work? Up to $6,000 can qualify for the credit, aside from the $5,000 you can put into a tax-favored account. Take advantage of this tax credit while you can, as It can cut your tax bill significantly. Children over 16 years old no longer qualify.  

Pro-tip: Don’t miss out on tax credits! They are far superior to tax deductions because they reduce your tax bill dollar for dollar! 

9. EITC (Earned Income Tax Credit) 

Remember what we just said about tax credits? This is not one you want to miss! According to the IRS, a whopping 25% of taxpayers eligible for the Earned Income Tax Credit fail to claim it each year. It can be complicated to figure out and many aren’t aware that they qualify. 

This credit is designed to supplement wages for low to moderate-income workers. However, many people can be considered “middle class” if they lost a job, took a pay cut, or worked fewer hours during the year. 

10. Refinancing mortgage points

Buying a house has many perks, taxes included. When you refinance a mortgage, you must deduct the points paid over the life of the loan. It doesn’t add up to that much in the long run, but it’s still worth saving! 

However, if you use part of the refinanced loan to improve your home, you may be able to deduct those points right away. 

11. Jury pay paid to the employer

Although most employees continue to pay employees who are on jury duty, the employees must turn over their jury pay to the company. However, the IRS requires the employee to report those fees as taxable income. To even the playing field, you can deduct the amount you give to your employer so you are not taxes on money that doesn’t end up in your bank account. 

12. Baggage fees for airports 

Calling all self-employers! Did you know you can be reimbursed for those pesky baggage, online booking, and changing travel plan fees? You can add these costs to your deductible travel expenses and save a chunk of money each year. 

13. Hobby expenses

It may sound strange, but you may be able to get reimbursed for the costs of some of your hobbies. For example, if you create custom jewelry holders on the weekend and sell $200 worth, you can deduct that as an expense. Keep in mind, even if it takes $500 for all the materials to make the holders, you can only deduct $200. 

This may help you recoup some of the expenses if your side gig hasn’t made a profit in three of the last five years. The IRS deems this to be a hobby. 

14. Tax preparation fees 

Taxes are difficult to manage, so it stands to reason that you should be able to deduct the costs for preparing them. This is possible if you deduct them as a miscellaneous deduction on Schedule A in the year you pay them. 

However, fees for preparing Schedule C for a small business, Schedule E for rents or royalties, or Schedule F for farm income should be deducted on their corresponding schedules. 

15. Financial planning and management expenses

Several expenses are deductive or subject to the 2% AGI threshold. If you paid a financial advisor, had an attorney prepare a living will or trust, or spent money to manage money this year, you’re eligible for this deduction.