I’m an Accountant: 4 Deductions Most People Forget About That Cost You Money

Very few people like tax season, but missing out on valuable deductions could mean leaving money on the table. Many taxpayers overlook key write-offs that could lower their bills or put more money in their pockets. 

“The reason people commonly overlook these deductions might be because they may have switched from taking the standard deduction to itemizing deductions,” said Armine Alajian, accountant and founder of the Alajian Group. “There may also be a simple lack of awareness, a fear of being audited, getting it wrong or due to a lack of good record-keeping.” 

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GOBanking Rates talked to accountants and tax experts about the four deductions most people forget about that cost you money.

Gig Economy Deductions

According to the IRS, the 2017 Tax Cuts and Jobs Act (TCJA) suspended the deduction of common job-hunting expenses, such as resume preparation and travel out of town for interviews or career fairs, from an individual’s federal income tax returns for tax years 2018 through 2025. 

However, some states allow deductions for job search expenses on state income tax returns. For specific information, check with your State Department of Revenue (which collects state taxes) or consult a tax advisor.

In addition, if individuals don’t qualify for job search deductions but obtain side gigs or bridge jobs — such as ride-share drivers — they could be eligible for business mileage on their cars, according to Intuit Turbo Tax.

Also according to the IRS, self-employed individuals who use their home as their primary place of business can deduct part of the operating expenses and depreciation of their home can also qualify for tax deductions. 

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Healthcare Expenses

Alajian said that taxpayers can deduct out-of-pocket medical and dental expenses for themselves, spouses or dependents during the taxable year.

“But if only these expenses exceed 7.5% of your adjusted gross income for the year,” Alajian said. “Anything less than that is not deductible. But that’s a good thing. It means your medical expenses aren’t too high.”

Kevin Quinn, estate planning attorney at Legacy Counsellors, PC, said another healthcare-related deduction is the cost of uninsured long-term care for seniors. 

“Home health or nursing home care is a Schedule-A deduction,” Quinn said. “It is missed in most cases because many seniors don’t itemize their deductions. It is important to look at the standard deduction versus the Schedule-A deduction to see which is most financially beneficial before filing.” 

Mortgage Deductions

Taxpayers can deduct home mortgage interest on the first $750,000 or $375,000 if married and filing separately, per the IRS.

“With this, homeowners can subtract the amount of money they spend on mortgage interest from their taxable income, which can then lower the amount of taxes that they owe,” said Adam Hamilton, CEO of REI Hub. The company provides accounting software for rental property owners. 

Hamilton explained that the IRS offers standardized and itemized deduction options for this deduction. While the standardized deduction provides an exact sum, calculating the itemized deduction can take more work.  

“Ultimately, the one you should do is the one that ends up being the highest amount because that gives you the biggest deduction,” Hamilton said. 

Big Purchases

When itemizing deductions on your federal income tax return for the 2024 tax year, you can choose to deduct either state and local income taxes or state and local general taxes, but not both. 

Taxpayers should decide based on which option provides the greater benefit. For example, some taxpayers live in states without an income tax while others buy big items subject to sales taxes like cars, motor homes and RVs or renovate their homes. 

Individuals can also use the IRS’s Sales Tax Deduction Calculator to evaluate their options.

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This article originally appeared on GOBankingRates.com: I’m an Accountant: 4 Deductions Most People Forget About That Cost You Money

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