When tax season rolls around, most people focus on the basics—standard deductions, earned income tax credits, and maybe a few work-related expenses. But every year, taxpayers leave hundreds or even thousands of dollars on the table by overlooking valuable deductions. The IRS allows for a variety of lesser-known deductions that could reduce your taxable income and maximize your refund. If you want to ensure you are keeping more of your hard-earned money, here are some hidden tax deductions you might be missing.
1. Job Search Expenses
Looking for a new job? Some of the costs associated with your job hunt may be deductible. This includes:
- Resume preparation costs (design, printing, and mailing expenses)
- Travel expenses (if you travel for an interview, airfare, hotel, and mileage may be deductible)
- Job placement agency fees
- Continuing education or certifications that improve your job prospects
To qualify, the job search must be in the same industry as your previous job, and first-time job seekers do not qualify.
2. State Sales Tax Deduction
If you live in a state without an income tax, you can deduct the state sales tax you paid throughout the year. This can be especially beneficial if you made large purchases, such as:
- A car, boat, or RV
- Expensive home improvements
- High-end electronics
The IRS provides a standard sales tax deduction for each state, but you can itemize your actual sales tax paid if you kept receipts.
3. Student Loan Interest Paid by Someone Else
Many parents help their children pay off student loans, but what most people don’t realize is that if someone else makes a student loan payment on your behalf, you can still claim the deduction.
The IRS treats these payments as a gift to you, meaning you can deduct up to $2,500 in student loan interest even if you didn’t make the payments yourself. The key requirement is that you must not be claimed as a dependent on anyone else’s return to take advantage of this.
4. Home Office Deduction
Many people assume the home office deduction only applies to self-employed individuals. However, even if you work remotely as a W-2 employee, you may qualify.
To be eligible:
- Your home office must be used exclusively for work (not a shared space).
- You must use the space for regular and substantial business activities.
The IRS allows you to deduct a portion of your rent, mortgage interest, utilities, and home repairs based on the percentage of your home used for business.
5. Medical Miles and Travel Costs
Many people know that large out-of-pocket medical expenses can be deducted, but mileage and travel costs related to medical care are often forgotten.
If you traveled for medical treatment, you may be able to deduct:
- Mileage to and from doctor appointments (calculated at the IRS standard medical mileage rate)
- Parking fees and tolls
- Airfare, lodging, and meals if treatment required overnight stays
The total medical expenses must exceed 7.5% of your adjusted gross income (AGI) to be deductible.
6. Childcare Expenses Paid with Pre-Tax Dollars
If you pay for childcare through a Dependent Care Flexible Spending Account (FSA) at work, you can use up to $5,000 in pre-tax dollars to cover childcare expenses.
Additionally, if you did not use an FSA, you may still be eligible for the Child and Dependent Care Credit, which allows you to claim up to 35% of childcare costs.
Qualifying expenses include:
- Daycare or babysitter costs
- After-school programs
- Summer day camps
7. Jury Duty Pay Given to Your Employer
If your employer continues paying your salary while you serve on jury duty, they may require you to turn over the jury duty pay you receive from the court.
Even though jury duty income is taxable, if you gave it to your employer, you can deduct that amount from your taxable income so you are not taxed on money you didn’t keep.
8. Tax Preparation Fees
You can deduct the cost of tax preparation services if you itemize your deductions. This includes:
- Tax software fees (such as TurboTax or H&R Block)
- Hiring a tax professional
- E-filing fees
These expenses must be part of your miscellaneous itemized deductions and must exceed 2% of your adjusted gross income to qualify.
9. Charitable Contributions Beyond Cash Donations
Most people know they can deduct cash donations to charity, but other forms of giving also qualify for deductions, including:
- Non-cash donations (clothing, furniture, electronics)
- Mileage driven for charity work
- Supplies purchased for a charity event
Make sure to keep detailed receipts and records for any non-cash donations, as the IRS may require proof of fair market value.
10. Mortgage Points Deduction
If you bought a home and paid discount points to secure a lower interest rate, these points may be fully deductible in the year of purchase.
If you refinanced your mortgage, the points are deductible over the life of the loan, rather than all at once.
How to Ensure You Claim Every Deduction
Missing out on these tax deductions could mean paying more in taxes than necessary. To ensure you maximize your refund:
- Keep detailed records – Maintain receipts, bank statements, and tax-related documents throughout the year.
- Itemize your deductions – If your total deductions exceed the standard deduction, it may be worth itemizing.
- Use tax software or consult a professional – A tax preparer or reliable software can help uncover hidden deductions.
Final Thoughts
Many taxpayers overlook deductions that could save them significant money. Whether it’s job search expenses, medical mileage, or education-related deductions, taking the time to review your eligibility can make a big difference.
When filing your taxes this year, make sure you’re not leaving money on the table. Double-check your deductions, keep good records, and consider seeking guidance to ensure you get the refund you deserve.
Would you like help identifying the deductions you qualify for? Contact us today to get started on your tax return.
