Did you know that there are a number of tax deductions that you may be able to take advantage of this year? If you’re not sure what they are, don’t worry! In this blog post, we will discuss 6 surprising tax deductions that many people don’t know about. So read on to learn more and see if you qualify for any of them!
1. Student loan interest deduction
If you’re looking to deduct up to $2500 of your student loan interest from taxes, there are some requirements that need to be met in order for this deduction. First off, the amount must be at least two percent of your adjusted gross income (AGI), and secondarily only those with a filing status of married filing jointly or qualifying widow(er) are able to take this deduction. It’s also important to note that the student loan interest must have been paid during the tax year in order to qualify.
You do not have to deduct the entire amount at once either; it’s your choice whether or not you want it deducted over time. If this sounds like something that could help alleviate some of your student loan debt burden, then make sure to look into filing for this deduction before April 17th!
2. Business use of your home deduction
If you use part of your home for business purposes, especially during the recent two years due to Covid-19, then you might be eligible for a deduction. To qualify, the space must have been used exclusively as an office where there are no personal activities taking place such as sleeping or watching television. However if there is any overlap between work life and home life (a few children can lead to this quite easily), the percentage of time used for business purposes will be calculated accordingly.
The deduction is based on the square footage that is dedicated to your office, and there are limits as to how much you can claim depending on your income level. This deduction can be a great way to reduce your taxable income, so if you think you might qualify make sure to research it further!
3. Job-hunting expenses deduction
If you’re looking for a job in your current occupation or field, there are some expenses that you can claim on your taxes. The most common being the cost of transportation to and from interviews, resume printing and mailing costs, as well as fees for online job postings. You can even deduct the cost of preparing for an interview, such as buying new clothes or hiring a photographer for your headshot!
While this might not seem like much of an expense at first glance, it can add up quickly if you are looking for work. So make sure to keep track of what’s deductible and what isn’t when job hunting – you may be surprised at how much money it saves in the long run!
4. Moving expense deduction
If your moving expenses are more than what you make in a year, then there is good news. You can deduct these costs from taxes! To qualify for this deduction, the move must be for work and it also has to be at least 50 miles further than where you used to live. Keep in mind that some moves do not count as deductible expenses – for example if you’re just moving due to personal reasons like wanting a change of scenery or better schools nearby.
If your move is for work, then there are ways that it could qualify as an expense deduction which can help save money in the long run. Make sure to keep track of these costs when filing taxes!
5. Charitable donation deduction
If you donated money to a charity last year, there are some things that can help you get more out of your donation. One thing is the size of the donation – if it’s less than $250 then all receipts must be kept for tax purposes. Another thing is whether or not any tangible goods were given in return for donations (like clothing or food items). If they were given as gifts, then make sure to keep track of these costs when filing taxes because they may be deductible expenses!
Donating isn’t only good for your heart – it can also help you save money on taxes. If you donated more than the standard deduction amount last year (which was $12,000 for single filers and $24,000 if married filing jointly) then consider itemizing instead of taking that deduction.
6. Medical expense deduction
If you had any medical expenses last year that weren’t covered by insurance, then they may be tax deductible. You can deduct up to $3,000 per person on your return if those costs are higher than ten percent of your adjusted gross income (AGI). If there is more than one person in your family with high medical costs for the year, then you can combine the totals to get closer to the $3,000 limit.
This deduction is often overlooked by taxpayers, so make sure to see if you qualify! High medical costs can be a burden, so it’s nice to know that there are ways to get some of that money back come tax time.
As tax season comes to a close, it’s important to be aware of all the deductions you may be eligible for. Keep in mind that some of these deductions may not be well-known, so it’s worth taking the time to research them and see if they could benefit you this year. Be sure to stay tuned for more updates and tips from our blog as we move closer to Tax Day!
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