10 commonly overlooked tax deductions

Millions of people in the country struggle to maximize their tax deductions yearly simply because they are unaware of excellent tax-saving opportunities. Tax season can be overwhelming and confusing for many. Every taxpayer wants to do what they can to minimize their liability and save as much money as possible. Still, sometimes it’s difficult to identify all the available potential deductions. Here is a list of potentially helpful tax deductions that are often overlooked.

Commonly overlooked tax deductions

State sales taxes
If you reside in a state that does not impose income taxes, you may deduct the sales tax you paid throughout the year.

Reinvested dividends
You may have received dividends reinvested in additional shares if you own stocks or mutual funds. These reinvested dividends can increase your tax basis and lower your taxable gains when you sell the shares.

Charitable contributions
The Internal Revenue Service (IRS) allows taxpayers to deduct charitable contributions made for qualified organizations, including those supporting underprivileged children. To claim a tax deduction for your charitable contribution, you must provide documentation verifying your contribution.

Student loan interest paid by parents
If parents repay a student loan their child is legally obligated to repay, the IRS considers the money as if it was given to the child who paid the debt. In addition, it means that the child may be able to deduct up to $2,500 of the student loan interest paid by their parents.

Out-of-pocket charitable contributions
Most people remember to deduct their cash donations to charity. However, they often overlook the small expenses incurred while doing charitable work, such as the cost of ingredients for a dish donated to a nonprofit bake sale.

Retirement account contributions
If you contribute to an individual retirement account (IRA) or 401(k) plan, you may deduct some or all of your contributions from your taxable income.

State tax paid last spring
Don’t forget to include the amount you paid as a deduction last year on this year’s federal tax return.

Refinancing points
When you refinance your mortgage, you can deduct the points paid to obtain the new loan over the life of the loan, as long as it’s your primary residence.

Relocation expenses to take the first job
If you relocated more than 50 miles to take your first job, you could deduct the cost of moving and storing your household goods.

Military reservists’ travel expenses
You can deduct your travel expenditure if you are associated with the National Guard or military reserve and traveling 100 miles or more in connection with your service. These can include meals and lodging as an adjustment to income on your tax return.

Tax deductions are invaluable for reducing taxable income and saving money. The key is to research common deductions and ensure you’re not missing the ones that could reduce your annual tax burden. Moreover, always remember to take advantage of deductions allowed by your state or district as well. Finally, always consult a qualified tax professional for advice specific to your situation when filing your taxes.