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10 Tax Deductions I Bet You Aren't Taking (But You Should Be!)

People are now starting to file their taxes for the 2018 tax year, but between changes to the tax law and general confusion surrounding itemized deductions, there’s a good chance you’ll miss a few things that can give you a tax break this year.

Tax deductions reduce your tax liability by knocking dollars off your taxable income. By taking advantage of as many deductions as possible, you’ll be able to save some money come tax season.

Here are 10 tax deductions you should look out for this year:

1. State income or sales tax: If you itemize deductions, you can choose to deduct either state income tax or state sales tax paid throughout the year. Most people choose state income tax because it’s higher. However, if you made a major purchase in 2018, the sales tax option might be better for you. Don’t forget that this deduction is capped at $10,000 for 2018.

2. Self-employed healthcare premiums: If you are self-employed, you may be eligible to deduct health insurance premiums you paid in 2018. This works for self-employed seniors on Medicare, as well. You may be able to deduct the premiums for Medicare Parts B and D.

3. Losses from gambling: If you gambled in 2018 and lost, you might be able to deduct the losses on your taxes. This deduction is limited to the amount of winnings you report, and you must keep careful logs of your wins and losses, receipts and locations of gambling to prove it.

4. Out-of-pocket costs for charity: You’re probably familiar with deductions for large charitable gifts, but you can also deduct out-of-pocket costs for supplies and more that occurred alongside charitable work, such as ingredients and supplies for a soup kitchen. Driving for charity also counts—you can deduct 14 cents per mile.

5. Jury pay: If you served on a jury last year and earned salary pay from your employer, you probably had to turn over some jury pay to them. You can deduct the amount of jury pay you paid your employer.

6. Self-employed travel expenses: If you own your own business and travel for it, you can add minor costs like baggage fees and online booking fees to your itemized deductions for business travel.

7. Medical expenses: Some medical expenses may be able to be deducted once they exceed 7.5 percent of your adjusted gross income (AGI). (After 2018, the total will need to exceed 10 percent AGI.)

8. Mortgage interest: You might be able to deduct the amount of interest you paid on your mortgage as long as the loan does not exceed $750,000, or $375,000 if you’re married filing separately.

9. Self-employed Social Security tax: If you’re self-employed, you have to pay 15.3 percent of your income toward Social Security taxes, since you don’t have an employer to split it with. However, you can deduct half of that on your taxes.

10. Military reserves travel expenses: If you serve in the military reserves, you are eligible to deduct any expenses incurred for you to travel to drills and meetings. You must travel over 100 miles from your home and stay overnight to be eligible for deductions.

Don’t set yourself up for losses this tax season

Navigating the world of tax deductions can be confusing, which is why it’s recommended to work with a financial planner to discuss your tax strategy and save the most money possible this tax season.


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