Commonly missed tax deductions you'll want to keep an eye on

Many common tax deductions are easily overlooked. You might think you can't deduct certain expenses, but in reality, claiming them could save you a lot of money on your taxes.

Whether you are new to filing taxes or have years of experience, you may realize after the tax year ends that you overlooked important tax deductions.

Read on to learn about overlooked tax deductions you can claim and how they can save you money.

Note: If you want to capture your overlooked tax deductions and all your other business expenses for the tax year, try Bonsai Tax. Our receipt tracker would scan your bank/credit card statements to discover all the tax write-offs you qualify for. In fact, users typically save $5,600 from their tax bill. Try a 7-day free trial today.

Top 50 overlooked tax deductions

There are various state and local tax deductions that many people tend to overlook. Among the most common are:

• Sales tax credit
• Income tax deductions
• Tax credits for large purchases such as boats or cars
• Student loan interest deductions

Note: if you want to capture all these frequently overlooked deductions automatically, try Bonsai Tax. Our receipt scanning feature will help you track, organize and record all of your tax deductions for you. The majority of users save $5,600 from their tax bill. Try a 7-day free trial today.

Sales Tax and Income Tax

Many people fail to claim their sales tax credit along with income tax deductions. If you live in a state without income tax, tracking your sales tax on personal and household items can increase your tax benefits.

If your state charges income tax, you can still claim deductions related to that. When filing, consider any major purchases like a boat or a car, as these might qualify for tax credits.

You might be able to save on income tax credit, as long as you can prove it was work-related. The same applies to sales tax.

Student Loan Interest

If you still have student loans or a dependent child with student loans, you can likely deduct the interest paid on those loans.

If it's your own student loan interest you are paying, then you should get a 1098-E form from your lender. There, you will see how much you have paid in student loan interest, allowing you to claim your qualifying expenses upon tax return.

You can deduct up to $2,500 of student loan interest each year. However, if you have a high income, your deduction may be limited or not allowed.

Self-employment tax deductions

If you are a self-employed person, you will no longer get your W-4 form - ergo, you won't be able to get every payroll deduction either. You won't have your state income taxes withheld anymore. However, you may still be able to snatch some of the tax deductions for your small business.

For instance, you may deduct a part of your self-employment tax from your adjusted gross income. You'll only be able to deduct 50% here - the amount that would normally be paid by your employer.

Charitable Contributions

Charitable donations do not just warm your heart—they can also lower your taxes. You can receive a tax deduction for qualifying donations.

You may deduct cash donations you give to charity. You can also deduct non-cash donations such as casseroles, fundraiser stamps, or other purchased items for charity. Local sales taxes are deductible here as well. Additionally, you can deduct mileage driven for charity using the standard mileage rate.

Job-hunting fee deductions

Job hunting can be expensive. You likely have to pay outplacement agency fees, mailing resumes, and other related costs. You may get a tax return for these expenses if you apply itemized deductions.

The IRS states that most job search expenses are tax-deductible if you've worked at least one job before. If you are searching for your first job, these expenses are not deductible.

Earned income tax credit benefits

Many low-income taxpayers receive this tax refund every year, but a quarter of taxpayers don't know they are eligible for these tax deductions.

Some people miss out on this refund because the rules are complicated. Most people with low-to-moderate income can qualify for this tax return; it is not limited to low-income earners.

Middle-class taxpayers can receive this tax return when their income decreases due to events such as job loss, reduced working hours, or pay cuts.

The tax refund amount depends on factors like your income and family situation. Married couples filing jointly generally receive more tax deductions, but costs are split accordingly.

Home office tax deductions

The home office tax deduction is a very common tax that people claim - but it's just as commonly missed. Many self-employed individuals - for instance, freelancers - may not know that they can deduct the room they are doing most of their work in.

You can deduct expenses for the specific room you use for work, including bills and mortgage interest. The rest of the house, used for personal purposes, does not qualify.

Pet moving tax deductions

Good news for pet owners: you can get some of their taxes deducted as well! Granted, if you are a small business owner and your dog, Fido comes with you for no good reason, you may not get the tax deduction. Fido needs to be there for a good reason.

However, if Fido is a service dog or if you are an armed forces member changing your station, then you might be able to deduct his shipping costs.

Meal expense deductions

You can deduct half of your meal expenses, even if not dining in a restaurant. Many know they can deduct official meals, such as dining with a business partner, but this deduction extends beyond that.

You can deduct half your meal expenses if traveling for business. The trip must be at least 100 miles away from home. Even a grocery-store meal or an airport burger can qualify as deductible.

Refinanced Mortgage Points

When it comes to property taxes, very few people know that refinancing mortgage points is also something that you may receive.

When you buy a home, you can deduct mortgage points in one payment—an interest-based percentage applied to the whole loan. When refinancing a mortgage, you can deduct points over the remaining life of the mortgage.

Deduct around 1/30th of your mortgage points. For instance, with a 30-year mortgage, you can deduct $33 for every $1,000 batch point paid. It might not seem like much, but take advantage of it. Discuss this with an advisor on property taxes for best results.

Wig Costs

Wigs are tax-deductible if you can prove they are medically necessary.

In most circumstances, a wig can have its tax burden removed if you can prove it was a medical need. For example, a certain medical condition may have caused you to lose your hair, and the doctor recommended that you wear a wig.

Training and college tuition deductions

You can get a tax return for attending college classes to obtain a degree or training courses to improve your job skills.

You may qualify for the Lifetime Learning Credit, which offers up to $2,000 in tax credits if your income falls below certain thresholds. To claim this deduction, fill in Form 8863 and submit it to the IRS.

Energy-saving home modification deductions

If you have a home office and make energy-saving home improvements, you can claim the residential energy-efficient property tax credit that few people know about.

For the 2024 tax year, you can get a 30% tax credit for installing a solar water heater or solar electric system. Claiming this credit reduces your tax bill and helps the environment.

Pregnancy Tests

Pregnancy tests are deductible as medical expenses. While it might seem like a small cost, pricier tests can reduce your tax liability.

Through medical miscellaneous itemized deductions, you may also be able to claim costs after the baby comes. For instance, supplies such as a breast pump may be written off as medical expenses.

Weight loss expense deductions

You can deduct weight loss expenses only if they are medically necessary.

Certain diseases may require weight loss or specific diets. If your doctor recommends this, you can deduct related weight loss expenses from your income taxes.

Dependent care and child care tax credits

You may be eligible for the dependent care credit if you paid for the care of a qualifying child or other dependents while you and your significant other worked.

Child tax credits reduce your tax liability dollar for dollar and are often more beneficial than standard deductions, which only reduce your taxable income.

Tax deductions for smoking cessation

Smoking cessation costs are deductible, but many people overlook this tax break.

If you enter a smoking cessation program, you can deduct the program costs and prescription drugs needed for nicotine withdrawal as medical expenses.

Theft or Casualty Losses

Theft or any type of casualty can be quite costly. Previously, taxpayers could deduct incidents such as fires, vandalism, car accidents, and other costly casualties. Due to Tax Cuts and Jobs Act (TCJA) modifications, many of those deductions were eliminated, but some still apply.

Deductions for theft or disasters are allowed if the events are federally declared disasters. The losses must not be covered by insurance and the value for each casualty must be at least $100.

Timeshare Property Taxes

According to Schedule A, Line 5B of the tax law, you may deduct personal property taxes if you sold a timeshare—a deduction few people claim. This can include annual maintenance fees, which are often billed separately.

You should check whether the buyer already reimbursed your taxes first or not. If they did, then you should have gotten a 1099-S. In Box 6, you should be able to see the amount that has been reimbursed.

Breast Surgery

Breast surgery can be deducted from your taxable income if it meets certain criteria. Cosmetic surgery performed solely to change appearance, such as going from a B-cup to a C-cup, is not deductible.

The IRS states that cosmetic surgery is deductible if a doctor recommends it for medical reasons. For example, breast reconstruction after cancer treatment qualifies for tax deductions.

Charitable travel cost deductions

Charitable trips can be deducted from your modified adjusted gross income, even if you are not traveling for work or pleasure.

When filing local income taxes, ensure your charitable trip has no significant vacation, recreation, or personal pleasure components to qualify for deductions.

You can enjoy some leisure time during your charitable trip, but your primary purpose must be to work at the charitable event. To qualify for a tax return, you must be on duty for a significant amount of time.

Note: The best way to track all your expenses for trips is you use our travel expense organizer. We'll organize all your bank/credit card receipts to capture all your travel expenses as well as other tax deductions. Try a 7-day free trial and see how much money you save.

Medicare B and D

Medicare Parts B and D premiums are deductible medical expenses. Additionally, if you did not receive Social Security benefits, you may deduct premiums you paid for Part A Medicare coverage. Your total medical expenses must exceed 7.5% of your adjusted gross income (AGI) to qualify.

Military Reserve Travel Costs

Members of the National Guard or Military Reserve can partially deduct travel expenses for drills or meetings when these events are at least 100 miles from home, requiring lodging.

You likely do not need to itemize these expenses. Treat them as deductible business expenses, allowing you to write off full lodging costs and half of your meal expenses.

Don't miss out on future write-offs with our tax deduction cheat sheet. Use it to discover more tax write-offs you can claim so you do not miss any during tax time.

What tax deductions can I claim without receipts?

In some circumstances, you may not be able to prove a certain payment through a receipt for taxes. You may have lost it, or you may have simply not received the receipt in the first place.

With that in mind, there are still certain tax breaks you can get even without the receipt. You just need to prove that you paid for them for work purposes. Here is what you can deduct without a receipt:

• Fuel and petrol using a logbook method
• Computer items with a credit card statement and notes
• Stationery with a credit card statement and photos

Union Fees or Membership Fees

These fees often appear on an income statement or a PAYG summary. You will not need a receipt to claim these income tax deductions regardless of the summary from your tax agent or employer.

Fuel and Petrol

Fuel and petrol can be deducted without a receipt by using the logbook method. You calculate your miles and determine a fuel rate. You can go without the logbook, but you must show how you calculated your fuel use.

Computer Items

Computer items qualify for a tax break even without a receipt. Provide a credit card statement and a detailed note on how the money was spent. Ideally, take a photo of the packaging or item upon receipt. If you do that, you might as well snap a picture of the receipt.

Stationery

If you have a credit card statement, you can also add stationery to your itemized deductions. Like computer items, take pictures of them as well.

Bottom line on top 50 overlooked tax deductions

Taxes can be confusing, and it may be hard to keep up with qualifications. Paying attention can save you a lot of money in the long run. Hang on to your receipts and consider consulting your tax advisor.

Tax deductions related to medical and healthcare expenses

How to deduct unreimbursed medical expenses in 2024

You can deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI) on your 2024 tax return. This means if your AGI is $50,000, only medical expenses above $3,750 qualify for deduction. Keep detailed records of payments for doctor visits, prescriptions, and medical equipment to maximize your claim.

For example, if you spent $6,000 on qualifying medical expenses and your AGI is $50,000, you can deduct $2,250 ($6,000 - $3,750). Use IRS Schedule A to itemize these expenses. Freelancers should track these costs carefully since they can significantly reduce taxable income, especially if you have high healthcare costs.

To take action, gather all receipts and invoices from medical providers and pharmacies throughout the year. Use accounting software like QuickBooks Self-Employed or expense tracking apps such as Expensify to organize these records. This preparation ensures you don’t miss out on eligible deductions when filing your 2024 taxes.

Deducting health insurance premiums as a freelancer

Freelancers can deduct 100% of health insurance premiums paid for themselves, their spouse, and dependents, even if they don’t itemize deductions. This deduction applies to premiums paid for medical, dental, and long-term care insurance in 2024. It directly reduces your adjusted gross income, lowering your overall tax bill.

For example, if you paid $6,000 in health insurance premiums last year, you can deduct the entire amount on your Form 1040, line 17. This deduction is especially valuable for freelancers who purchase insurance through the marketplace or private plans. Remember, this deduction is limited by your net self-employment income, so if you report a loss, it may not apply.

To claim this deduction, keep records of all premium payments and confirm your insurance qualifies. Use tax software like TurboTax Self-Employed or consult a tax professional to ensure you apply the deduction correctly. Doing so can save you hundreds or even thousands of dollars on your 2024 taxes.

Medical equipment and home modifications you can deduct

Expenses for medical equipment and home modifications prescribed by a doctor are deductible if they are primarily for medical care. This includes items like wheelchairs, hearing aids, and home ramps installed for accessibility. In 2024, these costs can be included in your total medical expenses for deduction purposes.

For instance, if you spent $3,000 on a stairlift to accommodate a disability, this amount can be added to your unreimbursed medical expenses. However, improvements that increase your home's value beyond medical needs may require you to reduce the deductible amount. Keep documentation from your healthcare provider to support the medical necessity of these expenses.

To maximize deductions, maintain detailed invoices and prescriptions related to equipment or home modifications. Consider consulting IRS Publication 502 for specific rules. Tracking these expenses throughout the year ensures you don’t overlook significant deductions when preparing your 2024 tax return.

Utilizing flexible spending accounts (FSAs) and health savings accounts (HSAs)

Contributions to FSAs and HSAs offer tax advantages that reduce your taxable income in 2024. FSAs allow you to set aside pre-tax dollars for qualified medical expenses, while HSAs provide tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical costs. Freelancers with high-deductible health plans can especially benefit from HSAs.

For 2024, the HSA contribution limit is $4,150 for individuals and $8,300 for families. Using an HSA not only lowers your current tax bill but also helps save for future healthcare expenses. FSAs typically have a $3,050 contribution limit and are offered through employers, but some freelancers may access them via spouse’s plans.

To leverage these accounts, open an HSA with providers like Lively or HealthEquity if you have a qualifying plan. Track all medical expenses paid from these accounts for accurate tax reporting. Taking these steps can provide substantial tax savings and improve your healthcare budgeting in 2024.

Tax deductions for freelancers and self-employed individuals

How to maximize home office deductions in 2024

Freelancers and self-employed individuals can claim the home office deduction if they use part of their home exclusively for business. The IRS allows two methods: the simplified option, which offers $5 per square foot up to 300 square feet, or the regular method, which requires calculating actual expenses like mortgage interest, utilities, and repairs. Using the regular method often yields a larger deduction but requires detailed record-keeping.

For example, if your home office is 200 square feet and your total home expenses are $12,000 annually, you could deduct a portion of those costs based on the office's percentage of your home's total square footage. Many freelancers overlook including expenses such as home internet and security system fees, which can also be partially deductible. Be sure to keep receipts and allocate expenses accurately.

To maximize this deduction, measure your workspace carefully and choose the method that benefits you most. Use tools like the IRS Form 8829 or tax software such as TurboTax Self-Employed to help calculate your deduction. Remember, the home office must be your principal place of business, so document how you use the space regularly.

Claiming vehicle expenses without hassle

Freelancers who use their vehicle for business can deduct expenses using either the standard mileage rate or actual expenses method. For 2024, the IRS standard mileage rate is 65.5 cents per mile driven for business purposes. This rate covers gas, maintenance, depreciation, and insurance. Keeping a detailed mileage log is essential to substantiate your deduction.

Alternatively, the actual expenses method requires tracking all vehicle-related costs, including gas, repairs, insurance, and lease payments, then multiplying by the percentage of business use. For example, if you drove 10,000 miles in total and 6,000 were for business, you can deduct 60% of your total vehicle expenses. Many freelancers miss out by not maintaining a log or mixing personal and business use without clear records.

To simplify tracking, use apps like MileIQ or Everlance, which automatically log and categorize trips. At tax time, review your logs and choose the method that yields the highest deduction. Remember, switching methods is allowed under certain conditions, but consult IRS guidelines or a tax professional to avoid errors.

Leveraging retirement contributions to reduce taxable income

Contributing to a retirement plan is a powerful tax deduction for freelancers. In 2024, self-employed individuals can contribute up to $66,000 to a Solo 401(k) if under 50, combining employee deferrals of $23,000 and employer contributions. These contributions reduce your taxable income, lowering your overall tax bill.

Many freelancers overlook the SEP IRA, which allows contributions of up to 25% of net earnings, capped at $66,000 for 2024. SEP IRAs are easier to set up and require less paperwork than Solo 401(k)s, making them attractive for new self-employed workers. Contributions must be made by the tax filing deadline, including extensions, so plan accordingly.

To take advantage, evaluate your income and cash flow early in the year and set up your chosen retirement plan. Use platforms like Vanguard or Fidelity, which offer low-cost retirement accounts tailored for self-employed individuals. Regular contributions not only save on taxes but also build long-term financial security.

Deducting professional services and subscriptions

Freelancers often pay for professional services and subscriptions that directly support their business. These expenses are fully deductible if they are ordinary and necessary. Examples include:

• Accounting software like QuickBooks
• Design tools such as Adobe Creative Cloud
• Subscriptions to industry publications or online courses

For instance, if you pay $50 monthly for a project management tool like Asana or Trello, you can deduct the full $600 annual cost. Similarly, fees paid to accountants, legal advisors, or marketing consultants are deductible. Tracking these costs throughout the year ensures you don’t miss out on legitimate deductions.

To stay organized, maintain a dedicated business bank account or credit card for these expenses. Use expense tracking apps like Expensify or FreshBooks to categorize and document payments. At tax time, aggregate these costs to claim the maximum deduction and reduce your taxable income effectively.