Top 5 Overlooked Tax Deductions

What You Need to Know: Top 5 Overlooked Tax Deductions

Tax season can feel overwhelming, and it's easy to focus on the big-ticket items when preparing your return. But did you know there are several often-overlooked tax deductions that could put more money back in your pocket? At Tax Resolution Plus, we want to make sure you're not leaving any hard-earned dollars on the table. Here are five key deductions you might be missing:

1. The Home Office Deduction: Your Workspace Could Save You Money

Do you regularly use a portion of your home exclusively for business? Whether you're a freelancer, run a side hustle, or even an employee working remotely, you might be eligible for the home office deduction. This allows you to deduct expenses related to the business use of your home, such as mortgage interest, insurance, utilities, repairs, and depreciation. ¹  

What you need to know: There are specific requirements to qualify, including the "exclusive use" and "regular use" tests. For the 2023 tax year, there's also a simplified option allowing you to deduct $5 per square foot of your home used for business, up to a maximum of 300 square feet (potentially saving you up to $1,500!).

2. Education Expenses: Invest in Yourself and Your Tax Bill

Continuing your education or taking courses to improve your job skills? You might be eligible for tax benefits. The Lifetime Learning Credit is a valuable credit for qualified tuition and other related expenses paid for courses taken to acquire job skills.

What you need to know: This credit is nonrefundable, meaning it can reduce your tax liability to $0, but you won't get any of it back as a refund. However, it can be worth up to $2,000 per tax return, and there's no limit on the number of years you can claim it. This can include tuition, fees, and required books and supplies.

3. Vehicle Expenses: Driving for Work Can Lead to Deductions

If you use your personal vehicle for business purposes (not commuting to your regular job), you could be eligible to deduct vehicle expenses.

What you need to know: You generally have two options:

• Standard Mileage Rate: For 2023, this rate is 67 cents per mile driven for business. This simplifies record-keeping.
• Actual Expenses: You can track and deduct the actual costs of operating your vehicle for business, such as gas, oil changes, repairs, insurance, and depreciation.

You'll need to keep accurate records of your mileage or actual expenses to claim this deduction.

4. Retirement Contributions: Secure Your Future and Reduce Your Taxes Now

Contributing to a traditional Individual Retirement Account (IRA) can provide a significant tax benefit in the present.

What you need to know: Contributions to a traditional IRA may be tax-deductible, meaning they reduce your taxable income for the year you make the contribution. This can lower your overall tax bill. There are limits to how much you can contribute and deduct each year, and these limits can vary based on your age and income.

5. Charitable Donations: Giving Back Can Also Benefit Your Taxes

Did you donate to a qualified charity during the year? You might be able to deduct those contributions if you itemize your deductions.

What you need to know: You can deduct cash contributions and the fair market value of goods you donate (like clothing or household items) to eligible organizations. Make sure to keep detailed records of your donations, including receipts and acknowledgments from the charity. There are limitations on how much you can deduct based on your adjusted gross income (AGI).

Don't Leave Money on the Table - Contact Tax Resolution Plus Today!

Navigating the world of tax deductions can be complex, and it's easy to miss out on valuable savings. Our experienced team at Tax Resolution Plus is here to help you understand your individual tax situation and identify all the deductions you're entitled to claim.

Stop overpaying on your taxes! Contact us today for a consultation and let us help you maximize your tax savings.

Email: info@taxresolutionplus.com

Phone: (866) 900-9001

www.taxresolutionplus.com

Serving the Irvine, California area and beyond.