Are You Leaving Money on the Table?
The US tax code has hundreds of deductions and credits, and the average taxpayer misses several they qualify for. Whether you itemize or take the standard deduction, there are tax breaks that can save you hundreds to thousands of dollars. Here are 12 commonly missed ones.
Commonly Missed Deductions
- 1. Student loan interest — Deduct up to $2,500 in student loan interest even if you take the standard deduction. Income limit: $90,000 single / $185,000 married
- 2. HSA contributions — Health Savings Account contributions are tax-deductible (up to $4,150 individual / $8,300 family). Growth is tax-free. Withdrawals for medical expenses are tax-free. The only triple-tax-advantaged account in existence
- 3. Home office deduction — If you are self-employed and use part of your home exclusively for business, deduct $5/sq ft up to 300 sq ft ($1,500) using the simplified method
- 4. Charitable contributions — Cash donations to qualified charities. Even non-itemizers can deduct up to $300 ($600 married). Itemizers can deduct up to 60% of AGI
- 5. State sales tax — If you live in a state with no income tax (Texas, Florida, Nevada, etc.), you can deduct state sales tax instead. Useful for big purchases (car, appliances)
- 6. Moving expenses for military — Active military moving for a permanent change of station can deduct unreimbursed moving expenses
Commonly Missed Credits (Even Better Than Deductions)
- 7. Saver Credit — If your income is below $36,500 (single) / $73,000 (married), you get a credit of 10-50% on the first $2,000 contributed to retirement accounts. Up to $1,000 free money
- 8. Earned Income Tax Credit (EITC) — For low-to-moderate income workers. Worth up to $7,430 for 3+ children. Many eligible families do not claim it
- 9. Child Tax Credit — $2,000 per child under 17. Partially refundable. Income phase-out starts at $200,000 single / $400,000 married
- 10. American Opportunity Credit — Up to $2,500 per year for first 4 years of college. 40% refundable even if you owe no tax
- 11. Lifetime Learning Credit — Up to $2,000 per year for any post-secondary education. No limit on number of years you can claim
- 12. Energy credits — Up to $3,200 for energy-efficient home improvements (heat pumps, insulation, windows) and up to $7,500 for qualifying electric vehicles
Pro tip: Credits reduce your tax bill dollar-for-dollar (better than deductions which only reduce taxable income). Always look for credits first.