Maximize Your Savings: Commonly Missed Tax Deductions and Strategies for Households

💵 Tax season can be overwhelming, but it’s also an opportunity to ensure you’re taking full advantage of every legal deduction and strategy available to reduce your tax burden. Let’s explore the most commonly missed deductions and legal ways to minimize your obligations, keeping more money in your pocket.

Commonly Missed Tax Deductions

💵 1. State and Local Taxes (SALT)

• Deduct up to $10,000 for state and local income, sales, and property taxes.

• Don’t overlook vehicle registration fees tied to the car’s value.

💵 2. Mortgage Interest Deduction

• Deduct interest paid on mortgages (up to $750,000 in debt for loans after 2017).

• Include home equity loan interest if the loan was used for home improvements.

💵 3. Student Loan Interest

• Deduct up to $2,500 in student loan interest annually, even if you don’t itemize.

💵 4. Education Credits

• Lifetime Learning Credit: Covers up to $2,000 annually for qualifying educational expenses.

• American Opportunity Tax Credit: Offers up to $2,500 per student for undergraduate costs.

💵 5. Child and Dependent Care Credit

• Claim up to 35% of childcare costs, with a maximum of $3,000 for one dependent or $6,000 for two or more.

💵 6. Medical and Dental Expenses

• Deduct unreimbursed medical expenses exceeding 7.5% of your adjusted gross income (AGI).

💵 7. Charitable Contributions

• Include both cash and non-cash donations, like clothing or household items.

• Don’t forget mileage driven for charitable purposes ($0.14/mile).

💵 8. Home Office Deduction

• For self-employed individuals, deduct the proportion of your home used exclusively for business purposes.

💵 9. Energy-Efficient Home Improvements

• Tax credits are available for installing solar panels, energy-efficient windows, doors, and HVAC systems.

💵 10. Retirement Contributions

• Deduct contributions to Traditional IRAs (subject to income limits).

• Maximize contributions to SEP IRAs, SIMPLE IRAs, or Solo 401(k)s if self-employed.

💵 11. Job Search Expenses

• Deduct costs like résumé preparation, travel for interviews, and employment agency fees.

💵 12. Health Savings Accounts (HSAs)

• Contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified expenses are tax-free.

Strategies to Minimize Your Tax Burden

💰 1. Maximize Retirement Contributions

• Reduce taxable income by contributing to 401(k)s, IRAs, or 403(b)s.

💰 2. Harvest Tax Losses

• Offset capital gains by selling investments at a loss (up to $3,000 annually).

💰 3. Utilize Flexible Spending Accounts (FSAs)

• Use pre-tax dollars for healthcare and dependent care expenses.

💰 4. Bunch Charitable Contributions

• Combine several years’ worth of donations into one year to exceed the standard deduction.

💰 5. Take Advantage of Tax-Free Fringe Benefits

• Use employer perks like commuter benefits, tuition reimbursement, and adoption assistance.

💰 6. Income Shifting

• Transfer income to family members in lower tax brackets through gifting or trusts.

💰 7. Set Up a 529 Plan

• Save for education with tax-free growth.

💰 8. Reassess Filing Status

• Married couples may benefit from filing separately or jointly depending on their circumstances.

💰 9. Leverage Depreciation

• Deduct depreciation to reduce taxable rental income for investment properties.

💰 10. Qualified Business Income (QBI) Deduction

• Deduct up to 20% of qualified business income if you’re self-employed or a small business owner.

💰 11. Defer Income

• Push income into the following tax year to reduce current-year taxes.

💰 12. Utilize Tax-Free Gains on Home Sales

• Exclude up to $250,000 ($500,000 for married couples) of gain from the sale of a primary residence if lived in for at least two years.

Pro Tips for Success

📋 Keep Records: Maintain receipts and documentation for deductions and credits. 💼 Hire a Professional: Tax professionals can tailor strategies to your situation. 📲 Use Tax Software: Many programs highlight overlooked deductions and credits.

By leveraging these commonly missed deductions and strategies, you can legally minimize your tax burden while maximizing your savings. I also have recommendations for trusted tax experts in the Colorado Springs area who can assist you based on your unique taxing situation. Always consult a tax professional to ensure compliance and optimization tailored to your financial goals.

📧 For my clients who closed on a home this year, I will be sending you your settlement statements at the end of January. This will help make finding some of your necessary documents for taxes a little easier. Look for that email from me soon!

For more expert advice and insights, connect with me:

• LinkedIn: https://www.linkedin.com/in/nicolestromrealtor/

• Instagram: https://www.instagram.com/nicole_strom_realtor/

• Facebook: https://www.facebook.com/Colorado.Springs.REALTOR.Military

• YouTube: https://www.youtube.com/channel/UCohPtBrINuizMZT_mTPx9rg

• Website: www.NicoleStromRealtor.com

• 📞 Phone: 719-922-0102