6 Most Overlooked Tax Deductions
With the tax season approaching, understanding your rights as a taxpayer is key to getting a lower tax bill. One of the simplest ways to achieve this is by taking advantage of deductions provided to us by the IRS.
With the tax season approaching, understanding your rights as a taxpayer is key to getting a lower tax bill. One of the simplest ways to achieve this is by taking advantage of deductions provided to us by the IRS.
The following are some overlooked tax deductions for various situations.
Take advantage of the home office deduction to reduce your tax bill if you work from home. The IRS allows you to write off a part of your home as an expense to reduce your bottom line. The formula is the same for both homeowners and renters. The simplest way to calculate this deduction is by multiplying your home office's square footage by $5.
Another overlooked deduction is for meals and entertainment. If you've ever treated a client to lunch or have taken them to an ice hockey game, you might be surprised to learn that these expenses are deductible. Generally, 50% of these bills are deductible. You'll want to limit this expense, as too many of these deductions could raise a red flag and put you on the radar.
Although gambling losses alone won't reduce your tax bill, you can use them to offset the cost of any winnings you've claimed. For example, let's say you hit the jackpot at the casino for $5,000. If you've lost $3,000 in bets over the course of the year, you can reduce your tax liability by $2,000. If you're a regular at the poker table, make sure to keep track of your annual spending to simplify this calculation.
If you've donated to a charitable cause, you can reduce this amount from your tax bill. This includes money, clothing, food, and other personal items. The IRS allows up to $600 for this deduction. Make sure to ask the organization for a receipt for your donation to keep for your records.
There are several healthcare expenses that the IRS allows you to write off. This can range from hospital transport costs to contact lenses and prescription drugs. Make sure to keep track of all medical expenses and check with your accountant to see which ones are deductible. You can deduct any unreimbursed medical expenses beyond 7.5% of your adjusted gross.
There are all sorts of quirky deductions available to pet owners who have particular circumstances. For instance, if a guard dog protects your small business, you're allowed to write off expenses related to pet care for that animal. You may also apply this deduction to pest control cats that watch your business. Service animals are another deductible expense given to us who own working animals. Keep track of all food, medical, and training expenses you incur for your active companion.
There are many other deductions that the average taxpayer could overlook. Ask your accountant to review these uncommon situations to ensure an optimized tax filing.
Disclaimer: This article is for informational purposes only and is not intended to be a substitute for professional consultation or advice related to your health or finances. No reference to an identifiable individual or company is intended as an endorsement thereof. Some or all of this article may have been generated using artificial intelligence, and it may contain certain inaccuracies or unreliable information. Readers should not rely on this article for information and should consult with professionals for personal advice.