Many taxpayers leave money on the table by missing deductions they qualify for. Here's how to maximize yours and reduce your tax liability.
Common Deductions People Miss
Review this checklist to see if you qualify for any of these commonly overlooked deductions:
- Home office expenses (if you work from home)
- Vehicle mileage for business or medical purposes
- Professional development and education
- Home improvements for medical accessibility
- Unreimbursed employee expenses
- Investment losses and capital losses
- Charitable contributions
- State and local taxes (SALT)
Standard vs. Itemized Deductions
Don't automatically choose the standard deduction. Calculate both options:
Standard Deduction
Flat amount based on filing status. Simpler but may not be optimal.
Itemized Deductions
Add up all deductible expenses. Better if total exceeds standard deduction.
Choose whichever gives you the bigger benefit. In 2024, the standard deduction ranges from $13,850 to $27,700 depending on your filing status.
Keep Good Records
The IRS may ask for proof of deductions. Keep receipts, invoices, and documentation for at least three years. Better yet, keep records for seven years to be safe.
✓ Action Item: Organize your receipts by category and keep digital copies backed up.
Tax Credits vs. Deductions
Don't confuse deductions with credits. Credits are even better because they reduce your tax dollar-for-dollar, while deductions only reduce your taxable income. Common credits include child tax credit, education credits, and earned income tax credit.