8 Unexpected Tax Breaks You Might Be Missing
Taxes can be tricky, but they also come with some perks—especially regarding deductions. While many people know about standard deductions like mortgage interest and charitable donations, several less obvious purchases might reduce your tax bill. Here are some unexpected tax-deductible items that could give you a break at tax time.
1. Self-Employed Health Insurance Premiums
If you’re self-employed and paying for your health insurance, you may be able to deduct the cost of your premiums. This can apply to health, dental, and qualified long-term care insurance for yourself, your spouse, and your dependents.
2. Job-Related Expenses for Teachers
Teachers often spend their own money on classroom supplies, and the IRS recognizes that effort. Eligible educators can deduct up to $300 (or $600 if both spouses are educators) for classroom expenses like books, supplies, and other materials.
3. Union Dues and Professional Membership Fees
While union dues aren’t deductible for employees under the Tax Cuts and Jobs Act, self-employed workers can deduct fees for union or professional memberships if necessary for their business. This can include dues for industry organizations and licensing fees, too.
4. Energy-Efficient Home Improvements
Going green has its perks! You may qualify for tax credits if you’ve made energy-efficient home upgrades, such as solar panels or energy-efficient windows. The specifics depend on the improvement type and the tax year, so check with a tax professional to see what qualifies.
5. Certain Business Meals
Are you self-employed and dining out with clients during a business trip? Under certain conditions, 50% of your meal costs can be deductible if they are directly related to business. Keep your receipts and document who was present and the business purpose.
6. Unreimbursed Medical Expenses
If your medical expenses exceed 7.5% of your adjusted gross income, the portion above that threshold could be deductible. This includes out-of-pocket costs like prescription medications, medical equipment, and even transportation to medical appointments.
7. Electric Vehicle Purchase
Did you go electric? The Clean Vehicle Credit provides up to $7,500 for new EVs and up to $4,000 for eligible used EVs, depending on the vehicle’s battery capacity and where it was manufactured. Your income must fall within certain limits to qualify, and the car must meet specific requirements. Check with a tax professional to see if your EV purchase qualifies for a credit.
8. State Sales Tax on Major Purchases
Living in a state without income tax might make you eligible to deduct state sales tax, particularly on significant purchases like cars or boats. While the amount varies, the deduction can be an excellent opportunity to save on federal taxes.
Maximize Your Tax Savings!
Claiming these lesser-known deductions requires a bit of record-keeping and understanding of IRS rules, but the tax savings can be worth the effort. It’s always wise to consult with a tax professional to ensure you get every deduction you qualify for.
If you’re a Carlson Hearne CPA client and want more personalized guidance on maximizing your deductions, we’re here to help! Contact us to discuss your unique financial situation, and let’s make tax season work in your favor.
Need a Second Opinion?
Tax laws can change, and navigating deductions can be confusing. The Carlson Hearne CPA team is here to keep you informed and help you make the most of every tax advantage you qualify for.