3 Tax Deductions You’re Probably Overlooking

Our experts answer readers’ investing questions and write unbiased product reviews (here’s how we assess investing products). Paid non-client promotion: In some cases, we receive a commission from our partners. Our opinions are always our own.Tax season has officially started. The IRS began accepting tax returns on January 29, 2024.The standard deduction for the 2023 tax year is $13,850 for single filers and those married filing separately, $27,700 for those married filing jointly, and $20,800 for heads of household. The deduction lowers the amount of income the IRS can tax you on, therefore lowering your tax bill. Instead of taking the standard deduction, though, you can opt to itemize deductions for certain expenses, including things like property taxes, mortgage interest, business expenses, and interest paid on student loans. There are more ways to lower your taxable income through itemized deductions than you might realize. Here are 3 tax deductions you may be missing out on:It’s hard to miss the large charitable donations that you made during the year by check or payroll deduction. But little contributions add up too, and you can write off out-of-pocket costs you incur while doing charitable work.Ingredients for meals you regularly prepare for a qualified nonprofit organization’s soup kitchen, for example, or the cost of stamps and paper that you buy for your school’s fundraiser, count as tax-deductible donations. Even the wrapping paper you purchased for holiday gifts to donate to a shelter would qualify.See the IRS guide to what qualifies as a charitable contribution. And if you drove your car for charity, remember to deduct 14 cents per mile.Did you owe state taxes the last time you filed? Then include that amount with your state tax itemized deduction on your 2023 return, along with state income taxes withheld from your paychecks or paid through quarterly estimated payments. Since 2018, the deduction for state and local taxes is limited to a maximum of $10,000 per year. If you had a lot of unreimbursed healthcare costs last year, those expenses may qualify for a deduction on your 2023 income tax return. You can only deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI). Some of the lesser-known medical expenses that you can deduct include acupuncture, contact lenses, addiction treatment, and chiropractic services for medical care. Claiming these deductions can substantially lower your tax bill.Be sure to check the entire list of IRS-approved medical expenses before including anything in your itemized deductions.If you are getting close to the filing deadline and you are not ready to file an accurate return, missing paperwork, or an emergency comes up, you might need to request more time. Filing for a tax extension gives you an extra six months to file your income taxes. But understand that a filing extension is not a payment extension. If you think you will owe taxes, send in your estimated payment by the tax deadline to avoid penalties and fees.Here are the dates to remember: Tax filing deadline: April 15, 2024Extension deadline: October 15, 2024

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