10 Most Overlooked Tax Deductions

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People will pay good money to a tax attorney or accountant to find a way to prevent Washington from getting a penny more than the government is legally entitled to. So it’s ironic that there are tax deductions that people often miss. Yet some of deductions go unused. This isn’t surprising given how complex the tax code is. Here are 10 often missed tax deductions.

Deduction #1: Charitable Tax Contributions

Most people know charitable donations to qualified organizations are tax-deductible. But did you know that your out-of-pocket expenses for charitable work are also tax-deductible? For example, the money spent on the materials used for the craft project you donated for sale at the organization’s yard sale is tax-deductible. And so is your mileage, at a rate of 14 cents per mile for the 2019 tax year.

Deduction #2: Student Loan Interest

Most people thought this tax-deduction opportunity was lost when the Tax Cuts and Jobs Act was passed a few years ago. But luckily, it’s still there. It allows taxpayers to deduct up to $2,500 in student loan interest on a single tax return.

Deduction #3: Sales Tax

Most people already know that state and local taxes are tax-deductible on your federal return. But what most people don’t know is that taxpayers can choose between deducting state and local income taxes or sales tax. In states where there’s no state income tax, it might make more sense to deduct the state and local sales taxes as opposed to the state and local income tax.

Deduction #4: Moving Costs for a First Job

The tax deduction for individuals moving for a first job isn’t as useful as it used to be. However, for those in the military and moving as a result of military orders, you can still take the moving cost deduction.

Deduction #5: Gambling Losses

To deduct gambling losses, you’ll need to keep careful records of all your gambling winnings and losses. In other words, to take a gambling loss deduction, you’ll also have to report some amount of positive gambling income. You’ll also need to itemize your deductions. Finally, your gambling loss deduction cannot exceed your gambling winnings.

Deduction #6: Educator Expense Deduction

Eligible teachers can deduct up to $250 for unreimbursed expenses on qualified education costs. This includes professional development materials, books, supplies and supplementary materials used in the classroom.

Deduction #7: Casualty Losses

If you have a casualty loss that’s not covered by insurance, and it’s the result of a federally declared disaster, then you can probably deduct those losses on your taxes.

Deduction #8: State Disability Insurance

Many Americans pay for Social Security disability benefits. However, some states have similar programs and require workers to make payments to the state. Taxpayers in these states can often deduct the state disability insurance contributions on their federal tax returns.

Deduction #9: Legal Fees

Until recently, it was relatively easy to deduct legal fees that exceeded a certain threshold of your income. But those deductions are no more. However, legal fees incurred from discrimination lawsuits and whistleblower awards are still deductible.

Deduction #10: Jury Pay

So the pay you get for serving jury duty is not tax-deductible. In fact, it’s taxable income. But sometimes, an employer will ask you to give them the jury pay you received. This usually happens when your employer pays you your normal wage while you serve on jury duty. When this happens, the jury pay you receive that you end up handing over to your employer is tax-deductible.

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