Every year, the IRS comes a-knockin’, and every year, many of us wait until the last possible minute to file our taxes. In the frantic hours before the annual filing deadline (April 18 this time around), don’t get so frazzled that you forget about some commonly overlooked tax deductions that could mean more money in your pocket.
Here are six tax deductions you might be eligible for:
Fostering a pet
You might think your furry, feathered, and scaly friends are a part of the family – but the IRS doesn’t share that sentiment. While claiming children as dependents can help you qualify for some awesome tax credits, pet parents don’t get the same break when filing taxes.
An exception? Pet foster parents. When you participate in an animal foster care program with a certified 501(c)(3) nonprofit, you may be able to deduct certain expenses.
Many foster organizations provide everything volunteer families need, like food, toys, and bedding. They typically take care of medical expenses, too.
However, any unreimbursed expenses are tax deductible. And if you put miles on your car going to and from the shelter or the vet, you can claim those as well: $0.14 per mile.¹
Not a foster? Pet lovers may qualify for other tax write-offs, like:
- Medical expenses related to service animals (i.e., the cost of having and caring for a service animal if medically required)
- Charitable donations to an animal shelter, rescue organization, or other animal-related nonprofit (save your receipts!)
Weight loss, smoking cessation, and other medical expenses
Service animals aren’t the only medical expense you may be able to deduct. If itemizing your deductions, you can claim a wide range of qualifying medical expenses, including:
- Fees for medical attention: This can include bills from doctors, surgeons, dentists, chiropractors, and psychologists.
- Weight loss programs: Programs must be for a specific disease or condition when diagnosed by a physician.
- Smoking cessation programs: Over-the-counter cessation aids do not count.
- Alcohol- and drug-addiction rehabilitation: This must be an inpatient program.
- Transportation: You can deduct the costs of traveling to a medical care facility – or even a conference related to a chronic condition that you, your spouse, or your dependent has.
The IRS provides a full list of qualifying medical expenses that you can review before filing your taxes, but read the fine print first! These are itemized deductions, and you can only claim medical expenses that exceed 7.5% of your adjusted gross income.
Looking for another medical deduction? Contributions to a health savings account (HSA) are tax deductible. For the 2022 tax year, contribution limits are:
- $3,650 for individuals
- $7,300 for families
Taxpayers who are 55 and older are eligible to contribute $1,000 extra over their limit.³
Head to head: Let’s break down HSA vs. FSA to see which is right for you.
Baggage fees (and other self-employment expenses)
Airlines don’t seem to mind driving passengers insane with outrageous baggage fees. If you get burned, Uncle Sam may be able to help alleviate the pain.
Self-employed individuals who must travel for business can deduct these costs as business-related expenses.
In fact, self-employed individuals and small business owners have a wealth of tax deductions available – and they need ‘em. Self-employment tax is 15.3% on top of the income tax rate for an individual’s tax bracket.
Self-employed individuals (also called independent contractors) should consider other major business expenses that may be tax deductible, including:
- Their home office
- Their car expenses (monthly payment, insurance, fuel, parking, etc.)
- Health insurance
- Phone and internet
- Continuing education
- Retirement contributions
- Office supplies, advertising costs, and other business expenses
As with any tax deduction, you want to ensure you are cleared to take it, or risk penalties if audited.
Self-employed individuals unsure of what to claim may want to work with a licensed tax professional and check out our guide to independent contractor taxes.
Student loan interest
We may still be holding out for student loan forgiveness, but in the meantime, individuals with student loans get a small break come tax season. Any interest paid on a federal or private student loan is deductible up to $2,500 a year.
This is just one of several educational tax credits and deductions available to past and current students that can help lower their taxable income and even result in a tax refund, including:
- The American opportunity tax credit
- The lifetime learning credit
- Work-related education expense deductions
Teachers can also deduct qualifying classroom expenses, including books, classroom supplies, and computer software.
If Lady Luck isn’t on your side at the casino, she’ll show up during tax season. Gamblers who walked away from the slot machines with less money than they started with may be eligible for a deduction.
If you’re itemizing deductions, you can claim gambling losses – but only up to the amount of your gambling winnings. For example, if you lost $500 but won $200, you can only claim $200 in gambling losses.
And, of course, you need a paper trail to prove your losses. Hold onto all the receipts showing your wins and losses if you plan to itemize.
Tax preparation fees used to be deductible, but now only self-employed individuals can take the deduction as a business expense.
But just because you can’t write off the cost of tax preparation doesn’t mean there aren’t any tax-related deductions available to you.
State and local taxes (SALT, for short) are deductible on your federal income tax return. You can deduct sales tax instead of state and local income taxes, but not both.
In addition to income (or sales) taxes, you may also be able to deduct state and local real estate taxes and personal property taxes.
There are a lot of nuances to this deduction, which is capped at $10,000.4 If you’re itemizing and planning on taking the SALT deduction, it’s probably a good idea to work with a tax preparer.
New to filing? These are the top tax terms and definitions you should know.
A note on the Tax Cuts and Jobs Act
If you’ve been filing taxes for a while, you may notice that some of your favorite tax deductions have disappeared. That’s a result of the Tax Cuts and Jobs Act, which went into effect in 2018.5
This act of Congress lowered individual tax rates, nearly doubled the standard deduction, and eliminated several tax deductions that we’d grown accustomed to, like:
- Moving expenses
- Unreimbursed employee expenses (like required uniforms)
- Alimony payments
- Tax preparation fees
Ever-changing tax laws like this can make it challenging to learn how to file taxes. Online tax software can usually help you identify tax credits and deductions you qualify for, but if you have a more complex situation, it may make sense to work with a professional.
What does tax deductible mean?
Tax deductible refers to an expense or fee that, for one reason or another, you can subtract from your total taxable income. For example, if you make $50,000 but qualify for $15,000 in tax deductions, your total taxable income decreases to $35,000. You only have to pay taxes on $35,000 instead of the full $50,000 – thanks to those tax deductions.
How do I write off business expenses?
If you are writing off business expenses, you’ll need to itemize your deductions on Schedule A (Form 1040). You should have receipts and documentation of any business expenses that you’re deducting.
Because itemizing deductions can be complicated, beginners and even seasoned independent contractors may want to use a professional tax preparer.
Feeling lost? Check out our guide to filing taxes as an independent contractor and the IRS guide to business expenses.
What deductions can I claim without receipts?
In general, you should always keep receipts for anything you plan to deduct from your taxes. Self-employed individuals have some exceptions, like:
- Self-employment tax deduction: Because you’re deducting a portion of your self-employment taxes, you don’t need a receipt. The tax return itself is evidence of this deduction.
- Home office tax deduction: You may not need receipts, per se, but if you’re claiming things like your monthly rent payment, you may need to provide some kind of documentation.
If you take the standard deduction, you don’t need any receipts.
Don't forget about the standard deduction
If you have enough qualifying expenses, itemizing your deductions may be the better way to lower your tax bill. But if you’re missing receipts or confused by the forms, consider the standard deduction.
In fact, the Tax Cuts and Jobs Act significantly increased the dollar amount of the standard deduction. For single filers in the 2022 tax year, the standard deduction is $12,950.6
If you use paid tax software or work with a professional accountant, you’ll likely be able to compare your itemized deduction and the standard deduction to see which option reduces your tax burden more.
Looking forward to your refund? Here’s how long it takes to get a tax refund – and what to do if your refund is deposited into the wrong account.