40 Overlooked Tax Deductions You Shouldn’t Miss
To help our Oregonian’s maximize their tax savings, let’s take a look at often overlooked tax deductions for 2024. From adoption credits to self-employed expenses, this list offers a quick overview of lesser-known deductions that could benefit you during tax season.
Adoption Assistance Programs: If your employer helps cover adoption expenses, you don't need to count this aid as income. It's a sensible way to manage the significant costs involved in adopting a child.
Adoption Credit: A practical credit for the costs incurred in the adoption process. This includes legal fees and other necessary expenses, helping offset the financial impact of adopting.
Alimony Payments: For agreements finalized before 2019, alimony payments are deductible. It's a straightforward way to handle financial obligations resulting from divorce proceedings.
American Opportunity Tax Credit: Investing in education pays off. You can get a credit of up to $2,500 per student for the first four years of college, covering tuition and related expenses.
Archer MSA Deduction: Contributions to your Archer MSA, especially if you're on a high-deductible health plan, are deductible. It's a smart move for managing healthcare costs.
Bad Debt Deduction: When debts turn out to be uncollectible, you can deduct these losses. It's a practical way to mitigate the financial impact of bad debts.
Business Expense Deduction for Self-Employed: Self-employment means keeping track of all business-related expenses, as they're deductible. This includes office costs, travel, and equipment.
Capital Loss Deduction: Balance out your capital gains with losses from asset sales. It’s a strategic approach to manage your investment portfolio.
Charitable Contribution Deduction: Giving to charity is not just good for the soul; it's also deductible. The limits depend on the type of donation and your income level.
Child Tax Credit: Supporting your family is a priority. The tax code recognizes this with up to $2,000 credit per qualifying child.
Credit for the Elderly or the Disabled: If you’re over 65 or disabled, there’s a tax credit available, though it depends on your income level. It’s a recognition of the financial challenges that can come with age or disability.
Dependent Care Credit: If you’re paying for childcare or care for a dependent, this credit acknowledges the necessity of these expenses in allowing you to work.
Disaster Loss Deduction: In the unfortunate event of a federally declared disaster, unreimbursed casualty losses exceeding 10% of your AGI can be deducted. It’s a necessary relief in tough times.
Early Withdrawal Penalties from Savings: Being penalized for early withdrawal from savings like CDs? You can deduct those penalties, a small consolation for accessing your funds early.
Educator Expenses Deduction: Teachers buying classroom supplies out of pocket can deduct up to $300. It’s a small way to acknowledge their dedication.
Electric Vehicle Tax Credit: Incentives for buying electric vehicles make it a more financially viable choice for environmentally conscious consumers.
Energy Efficient Home Improvement Credit: Making your home more energy-efficient is not only good for the environment but also for your taxes. This credit acknowledges these valuable improvements.
Fee-Basis Government Officials: State or local officials paid on a fee basis can deduct their business expenses. It’s a recognition of their service and costs.
Foreign Tax Credit: Paying taxes abroad doesn’t mean you should be taxed twice. This credit prevents that, maintaining fairness in the global economy.
Health Coverage Tax Credit: This credit covers a significant portion of qualified health insurance premiums, offering financial relief where it’s most needed.
Health Insurance Premiums for Self-Employed: Self-employed individuals can deduct their health insurance premiums, a necessary recognition of the challenges of self-employment.
Home Office Deduction: Using part of your home for business? Deduct a portion of related expenses. It’s a practical way to manage your business costs.
HSA Contributions: Contributions to your Health Savings Account are deductible, a wise move for managing high-deductible health plans.
Investment Expenses Deduction: Deduct the costs incurred in generating investment income. It’s a practical approach to investment management.
Investment Interest Expense: Interest paid on loans for investment property is deductible. It’s a strategy that can optimize your investment portfolio.
IRA Deduction: Contributions to a Traditional IRA may be deductible. It’s a smart way to prepare for retirement, especially considering various income and filing criteria.
Jury Duty Pay: If you handed over your jury duty pay to your employer, deduct it. It’s a matter of fairness.
Lifetime Learning Credit: Up to $2,000 credit for education expenses benefits lifelong learners and acknowledges the ongoing value of education.
Medical Expense Deduction: Unreimbursed medical expenses over 7.5% of your AGI are deductible. It’s an important consideration in managing healthcare costs.
Military Moving Expenses: For our service members moving due to a permanent change of station, deducting moving expenses is a necessary support for their commitment.
Mortgage Interest Deduction: Interest on your home mortgage is deductible, up to a certain limit. It’s a cornerstone of home ownership incentives.
Mortgage Points Deduction: Points paid on your mortgage for home purchase or improvement are deductible. It’s a practical aspect of home financing.
Personal Property Rental: Deduct expenses from renting out personal property. It’s a sensible way to handle this type of income generation.
Qualified Business Income Deduction: A deduction of up to 20% of qualified business income is a significant boon for self-employed individuals and small business owners.
Real Estate Tax Deduction: Deducting state and local real estate taxes is a basic component of managing property-related expenses.
Reserve Members' Travel Expenses: Deducting travel expenses for reserve members traveling more than 100 miles from home acknowledges their service and the unique costs involved.
Retirement Contributions for Self-Employed: Self-employed individuals can deduct contributions to retirement plans, a crucial part of securing their financial future.
Saver's Credit: Encouraging saving for retirement with a credit is a practical incentive for building a financial safety net.
Self-Employment Tax Deduction: Deducting half of the self-employment tax is a fair way to handle the dual burden of this tax for self-employed individuals.
State and Local Tax (SALT) Deduction: Deducting state and local taxes, up to a limit, is a matter of basic tax fairness and acknowledges the varied tax burdens across different locales.
Navigating the intricacies of tax deductions can be a challenging but rewarding journey. It's important to remember that each individual's financial landscape is unique, and what may be an advantageous deduction for one may not apply to another. This is where personalized guidance becomes invaluable.
At Gallagher, we’re here to help you understand your specific financial goals and circumstances. We provide tailored advice to ensure you're not only compliant with tax laws but also maximizing your savings and financial potential.
So, don't let the complexity of tax deductions deter you from making informed decisions about your finances. Reach out to us for a consultation on any of the items mentioned or for a comprehensive review of your tax situation. Together, we can uncover the most beneficial strategies for your unique financial journey.