6 Tax Deductions You Might Be Missing
Assume the standard deduction is all you’re entitled to, and you could be forking over more money to Uncle Sam that you need to. “People in their 20s and 30s face a lot of life changes, and life changes can lead to big deductions,” says Lisa Greene-Lewis, a certified public accountant and tax expert with TurboTax. “If you don’t take time to consider your deductions, you could be missing out.”
Keep in mind that the threshold for making itemized deductions worthwhile is $6,300 for a single person or $12,600 for a married couple filing jointly (which are the amounts of the standard deductions). Think you can’t hit those figures without major write-offs like homeownership or a couple of kids? You might be surprised. And you also might be surprised to learn that there are some deductions you can take even if you go the standardized route. In other words: You can’t afford not to read this list.
1. PURGING YOUR CLOSET
OK, so you didn’t write a $10,000 check to charity this year. But that doesn’t mean the smaller donations you made won’t add up. “If you clean out your closet and donate the clothing, ask for a receipt when you drop off the bags,” says Greene-Lewis. If you estimate what people might pay to buy those clothes, you can deduct that amount on your taxes.
Likewise, if you brought ingredients to the local soup kitchen regularly, save those grocery receipts so you can write off the expense. “Even if you’re not donating anything, if you volunteer your time at a charitable organization, you can deduct the mileage to drive there and back at 14 cents per mile,” Greene-Lewis says.
2. HUNTING FOR A NEW GIG
Job-hunting expenses you rack up while trying to land your first job out of school aren’t deductible (sorry!), but the cost of finding your second, third, or 30th job are. “That can mean anything from career counseling to resume prep to airfare for travel directly related to looking for a job,” says Greene-Lewis. Your search doesn’t have to be successful in order to take the deduction, either. One caveat: The new position you’re seeking has to be in the same field as your current position. So if you’re looking to move from project manager to restaurant chef, that job search is entirely on your dime.
3. TAKING A CLASS
Students pursuing a four-year degree can claim the American Opportunity Credit for up to $2,500. But even if it’s been years (or, ahem, decades) since you played Frisbee on the quad, the IRS wants to cut you a break for spending some money on school. The Lifetime Learning Credit is worth up to $2,000 a year for any post-high school course that leads to new or improved skills—whether that means a weekend computer class at the community college or a welding course at a trade school. “And there’s a new law this year, that if you go straight from work to school, you can deduct that mileage as well,” says Greene-Lewis.
4. PAYING OFF THOSE STUDENT LOANS
If you’re footing the loan by yourself, you might already know that you’re entitled to claim student loan interest up to $2,500 a year. But if your parents are ponying up for a loan that’s in your name, you might not realize you can deduct that interest, too. And don’t worry about arm-wrestling over the deduction, either: Because your parents aren’t liable for the debt, Uncle Sam says they can’t deduct the interest.
5. FOSTERING FIDO
Caring for a pet is pricey. But if the dog you’re housing is part of a foster arrangement, you can deduct those expenses. “Fostering fees, vet bills, pet food—all of it can be deducted, as long as it’s a foster animal,” says Greene-Lewis. The only other time the IRS will cut you some monetary slack for keeping an animal is if you use one for your business, like a security dog at a warehouse.
6. DRIVING FOR UBER
“More and more people are driving for Uber, Lyft, or other companies that are part of the on-demand economy,” says Greene-Lewis. “They’re always surprised to learn that if they bought a car at the beginning of the year, they might be able to deduct up to $25,000 for their car.” Drivers who are only dabbling with the car service, take note: You have to be able to prove that you used your wheels for work at least 50 percent of the time.