The Most Overlooked Tax Deductions That Pay Off Big

Whether you’re a business owner or a student, there are a lot of techniques to save money during tax season. Learn about the most overlooked tax deductions.

What worries Americans the most? Money.

Recent studies show that not only is money the number one cause of stress in America, but it’s also taking over people’s lives. Over 59% of Americans report that they are constantly worrying about their finances.

Trying to find ways to earn more money has become the primary focus of life for many individuals. Yet what if instead of trying to get more, you learned how to do a better job of keeping the money you already have?

Learning about the most overlooked tax deductions is a great way to hold onto the money you’ve already earned. Read on to learn about 3 commonly overlooked tax deductions that could help you save big.

Most Overlooked Tax Deductions

Not knowing what tax deductions you qualify for can end up costing you thousands of dollars. While missing out on 1 or 2 tax deductions might not seem like a big deal at first, over time they can grow into a sizeable savings opportunity.

Here’s a list of 3 commonly overlooked tax deductions:

1. Student loan interest
2. Childcare
3. Charitable contributions

Let’s start by looking at one of the biggest deduction opportunities, student loan interest.

1. Student Loan Interest

Are you currently paying off student loans? If so, you may qualify for a tax deduction for the interest you’ve already paid.

Tips about deducting student loan interest:

• $2,500 is the limit
• The deduction applies to household’s with income less than $80K
• You have to know your filing status and adjusted gross income

If you’re paying student loans, you can deduct up to $2,500 of the interest you’ve paid over the last year.

You will then claim the deduction as an adjustment to your income. Keep in mind however that student loan interest deductions are only available to individuals that earn less than $80,000 a year.

If you’re filing jointly you can have a household income of up to $165,000 a year and still be eligible for the deduction. If you’re unsure of your income, online tools like PayStubCreator, are helpful for determining household incomes.

2. Childcare Services

Childcare services is one of the most overlooked tax deductions because parents don’t realize what qualifies as childcare. Babysitters, summer camps, daycare visits, and any other type of childcare services can qualify for a tax deduction.

Here are a few tips about deducting childcare services:

• Children must be under 13 years of age
• Adult dependants qualify in certain cases
• Tax credits usually max out at $3,000 per child

Make sure you keep a copy of all the receipts you receive for any childcare services. Qualifying children under the age of 13, can make you eligible for a tax credit of up to $3,000 per child.

3. Charitable Contributions

If you’re planning on deducting charitable contributions, you’ll first need to make sure your donation qualifies. Here are some tips for deducting donations:

• Check for organization eligibility before deducting
• Provide receipts from all donations
• Itemize each donation individually

Only certain organizations are eligible by the IRS to collect non-taxable contributions. Double-check that the institution you’re donating money to meets the criteria for being a qualified organization. Next, after verifying that the organization qualifies, you’ll need to start itemizing your deductions.

Organizing Your Tax Deductions

Now you know more about the most overlooked tax deductions. Yet, knowing what items you can deduct won’t help you if you don’t have the necessary paperwork and receipts.

To avoid any tax day fiascos we suggest having one designated location to store your tax papers. You can also store your documents virtually, to make it easier to access them when tax time comes.

Don’t let money troubles take over your life. The more you can learn about how money works, the easier it’ll be for you to set yourself up for success.

Ready for some financial tips that will blow you away? Go ahead and check out our resources section today!