As tax season approaches, many people focus on the most well-known deductions, such as the standard deduction and mortgage interest. However, there are several lesser-known tax deductions that can help reduce your tax bill. By being aware of these deductions, you can maximize your tax savings and keep more money in your pocket. Here are some tax deductions you may not have considered:
Moving expenses for your first job
If you moved more than 50 miles to start a new job, you may be able to deduct certain moving expenses. This includes the cost of hiring a moving company, renting a moving truck, and even the cost of travel to your new location. To qualify, your new job must be at least 50 miles farther from your old home than your old job was from your old home.
Unreimbursed employee expenses
If you’re an employee and your employer doesn’t reimburse you for work-related expenses, such as travel, meals, or uniforms, you may be able to deduct these expenses. To qualify for this deduction, the expenses must be ordinary and necessary for your job, and you must be able to itemize deductions.
Energy-efficient home improvements
If you made energy-efficient upgrades to your home, such as installing solar panels, geothermal heat pumps, or energy-efficient windows and doors, you may be eligible for a tax credit. The credit can be up to 30% of the cost of the improvements and is subject to certain limitations.
Tax preparation fees
If you paid for tax preparation software or hired a tax professional to help you prepare your tax return, you may be able to deduct these expenses. This deduction is subject to a limit of 2% of your adjusted gross income, so it may not be a significant deduction for everyone.
Dependent care expenses
If you pay for dependent care services, such as daycare for your children or care for a disabled spouse or elderly parent, you may be able to claim a credit or deduction for those expenses. The credit can be up to 35% of the qualifying expenses, and the deduction is subject to certain income limitations.
Investment fees and expenses
If you pay fees for investment advice or other investment-related expenses, you may be able to deduct these expenses. This deduction is subject to a limit of 2% of your adjusted gross income, so it may not be a significant deduction for everyone.
In summary, taking advantage of these lesser-known tax deductions can help you save money on your tax bill. However, it’s important to note that eligibility for these deductions may depend on your specific situation and may be subject to certain limitations, so it’s best to consult with a tax professional or use tax software to determine if you qualify. Don’t leave money on the table – be sure to consider all the deductions you may be eligible for when preparing your taxes.