7 Most Overlooked Tax Deductions, Credits, and Exemptions
by Gabriel Lewit
If you want to save yourself the most money possible on your tax returns, you must take advantage of the many tax deductions currently offered by the U.S. tax code. This code changes regularly as tax brackets shift. That’s why we’ve provided you with this list of the most up-to-date tax deductions, credits, and exemptions that apply to you.
The right tax professional can help you save money. Discuss inflation and tax planning in Chicago, IL, with SGL Financial.
Because many new tax code provisions were not adjusted to account for inflation, taxpayers will pay more in 2022. However, we can help you retain as much of your wealth as possible with these tax planning strategies.
What are the potential tax deductions, credits, and exemptions available to me?
1. Out-of-Pocket Charitable Contributions
Many people forget that charitable contributions made out of pocket are tax-deductible. Did you give clothes or furniture to the Salvation Army or Goodwill? Did you donate food to a local food bank or church?
In fact, you can even deduct 14 cents per mile for every mile you drive for a charitable cause. Make sure to keep track of your charitable contributions throughout the year and hold onto donation slips or receipts.
2. Student Loan Interest Paid by You or Someone Else
As long as you are not claimed as a dependent, you can deduct up to $2,500 worth of student loan interest, paid either by you or by someone else. This is because the IRS treats money that other people paid on your student interest as the money that was given to you and that you decided to put towards your student loan interest. This is a handy deduction if you have a hefty student loan and have to pay a student loan interest annually.
3. Social Security Taxes for the Self-Employed
People who are self-employed and run a small business have to pay an extra 7.65% for Social Security and Medicare. If you fall into this category, you can deduct the additional
7.65% without itemization. People who are not self-employed do not have access to this deduction because their employers pay the extra 7.65%.
4. Home Office Expenses
This deduction only applies to people who use a part of their home exclusively for business. It does not necessarily have to be an “office” per se. It could be a section of your basement, a spare bedroom, etc. But, if you use this space as your primary business location, you might be able to deduct some of the home expenses you pay every month.
These expenses can include rent, heating, air conditioning, internet, property taxes, etc. For self-employed people who work from home, the home office deduction can be thousands of dollars each year. So, don’t overlook this one if you have a home office that you use exclusively for business.
5. Medical Expenses
The IRS allows you to deduct medical expenses that exceed 7.5% of your adjusted gross income. So, if you had an adjusted gross income of $100,000, you would only be able to deduct medical
expenses over $7,500. Dental costs may also be subject to deduction.
You are not allowed to deduct medical expenses reimbursed by your insurance company. So, for example, if you had an adjusted gross income of $100,000 and if you had $20,000 worth of medical expenses, but if $10,000 were reimbursed by your insurer, you would only be able to deduct $2,500.
6. Jury Pay Given to Employer
Did you have jury duty in the last 12 months? If so, this deduction could apply to you. Many companies pay employees their full salary while they are on jury duty. However, many of these companies require that their employees give their jury pay back to the company.
If your company made you hand over your jury pay, you could deduct the jury pay amount you gave to your employer. This is helpful because the IRS requires that you report your jury pay as income. So, this deduction helps balance things out if you had to give your jury pay to your employer.
7. Gambling losses
Every year, millions of people gamble at casinos in America. Many people lose money playing games like roulette, slots, craps, baccarat, and blackjack. So, if you gamble regularly and experience losses, you should keep track of your losses and receipts, as you will be able to deduct them (itemized).
However, losses are only deductible to the amount of gambling winnings you have. For example, if you lost $20,000 and won $10,000, you would only be able to deduct $10,000. The good news is that you can deduct gambling losses for lottery tickets, racetracks, bingo, and raffle tickets in addition to traditional casino losses.
Knowing the most overlooked tax deductions can help to prevent you from accidentally overlooking them too. Even if you claim just a few of these deductions, it can make an enormous difference in your taxes. Do you need help finding the best deductions for your situation?
Tax planning for individuals in Buffalo Grove, IL, and all of Chicagoland, is our specialization at SGL. We can help ensure that you don’t overlook valuable deductions that you qualify for so you can keep as much of your hard-earned money as possible.
You deserve to rest assured knowing that when you file with SGL Financial, you receive the ultimate in expert CPA tax preparation, a 100% guarantee of our work, advanced tax planning strategies, audit department assistance as needed, and transparent pricing. In working together, our approach is always putting your best interests first. Review our services, then get in touch with our team today by calling or scheduling an appointment online.
Financial planning in Chicago starts with asking the right questions. We look forward to speaking with you soon to provide the help you need!