12 Tax Writeoffs That Are Easy to Overlook

MarketsMotley Fool

Source: Getty Images

1 of

Value in the obscure

There are only days remaining until the end of tax season, and millions of taxpayers are scrambling to find last-minute deductions they can take to save on their tax bills. Most people are well-aware of the common writeoffs that taxpayers frequently use, such as charitable contributions. What can slip past your radar, though, are more unusual writeoffs that are still potentially valuable in bringing your taxes down. Click through to look at 12 tax writeoffs that too many taxpayers miss out on in the rush of tax season.

ALSO READ: The 3 Top Tax Deductions for the Average American

Previous

Next

Source: Getty Images

2 of

1. Motor vehicle taxes

Most people understand that state and local income and real estate taxes are deductible, with 2017 being the last year that this deduction is unlimited. But what many people miss is that if your state imposes taxes on your vehicle that are based on its value, then you can generally deduct them as state and local tax payments as well.

Previous

Next

Continue Reading Below

Source: Getty Images

3 of

2. State sales taxes

For a long time, sales tax wasn't allowed as a deduction on your federal return. That left residents in the states that don't impose an income tax largely out of luck, and that drew complaints that states that relied more on sales tax than income tax revenue were unfairly penalized. Therefore, the government passed a law allowing you to choose to deduct sales tax or state income tax but not both. You can deduct either your actual sales tax paid or use a table that's tied to typical spending for people at your income level to make things easier.

Previous

Next

Source: Getty Images

4 of

3. Mortgage points

The portion of your monthly mortgage payment that represents interest is deductible, and nearly everyone gets that right when they file their tax returns. But what many people don't realize is that if you pay upfront points on a purchase loan, then you can generally deduct the full amount in the year in which you pay them. That's not available for refinancing transactions, unfortunately, and there, if you pay points, then you have to spread out the deduction over the course of the entire loan period.

Previous

Next

Source: Getty Images

5 of

4. Student loan interest -- even if you didn't pay it

Interest paid on student loans is eligible for a deduction, and the nice thing is that you don't even have to itemize your deductions in order to claim it. Most graduates take this deduction appropriately, but the one area that often trips people up is that if parents make loan payments on the student's behalf, the student is still the one who gets the tax break. If you're paying interest on a student loan, you can still deduct that interest even if you don't itemize other deductions. The student loan interest deduction adjusts your income, and so you can take a full standard deduction and still claim your interest payments if you wish.

ALSO READ: 2017 Is Your Last Shot at This $1.14 Trillion Tax Writeoff

Previous

Next

Source: Getty Images

6 of

5. Alimony payments to an ex-spouse

Taxation of payments made pursuant to divorce agreements can get complicated. Child support and maintenance payments between ex-spouses generally don't have any tax impact, with the paying ex-spouse not being able to deduct them and the receiving ex-spouse not required to include them as income. But the rules are different for alimony, where the payer gets to deduct the amount paid and the receiver has to include the amount received as taxable income. Those rules are changing due to tax reform, but the old rules still apply for your tax returns for 2017 and 2018.

Previous

Next

Source: Getty Images

7 of

6. Classroom expenses paid by teachers

Teachers often end up funding their students' educations on their own dime, and the tax code acknowledges that fact by offering a special deduction. Educators can deduct up to $250 in spending on classroom needs without itemizing. Most employees aren't able to do the same, as unreimbursed business expenses are classified as miscellaneous itemized deductions that are only deductible to the extent they exceed 2% of your adjusted gross income.

Previous

Next

Source: Getty Images

8 of

7. Penalties on early withdrawal of savings

If you invest in bank certificates of deposit and need to pull out the money before the CDs mature, then most banks impose an early withdrawal penalty that requires you to give up some or all of the interest that you've earned. You'll still have to report that interest as income on your tax return, but you also get to deduct the forfeited penalty amount without itemizing. You should find information about any penalties you've paid on the tax form your bank sends you.

Previous

Next

Source: Getty Images

9 of

8. Medical transportation expenses

Most taxpayers know that money they spend on hospital bills, doctor visits, necessary medical equipment, and other healthcare needs count as qualified medical expenses that they can deduct in some cases. If you have expenses exceeding 7.5% of your adjusted gross income, then you can deduct the excess as an itemized deduction. But included in qualified medical expenses is also the cost of transporting a patient to the caregiver, including mileage, tolls, and parking charges. Every little bit can add up to help you qualify for a deduction.

ALSO READ: 5 Tax Mistakes to Avoid This Year

Previous

Next

Source: Getty Images

10 of

9. Moving expenses for your first job

2017 will be the last year that you can take qualified moving expenses as a deduction, as tax reform eliminated the writeoff for 2018 and future years. The rules can be complicated, requiring that your new job be far enough away from your old home to justify the move. Many taxpayers misinterpret the rules as meaning that you can't deduct expenses for a first job, but you can as long as the job is 50 miles away from where you lived prior to starting your career.

Previous

Next

Source: Getty Images

11 of

10. Jury duty pay that your employer took away

If you served on a jury, you probably got at least a small payment for your service. Some employers require you to give up that payment in exchange for giving you paid time off for the time served. You'll still have to include the jury duty pay as income on your tax return, but you can deduct that pay as an adjustment to income on the front page of your 1040 form so that you don't end up getting taxed on money that you had to give up.

Previous

Next

Source: Getty Images

12 of

11. Self-employed health insurance premiums

If you work for yourself, then you're eligible to write off the premiums that you pay for health-related insurance. That includes not only traditional health insurance for medical expenses but also dental insurance and long-term care insurance. Note that most people who work as employees aren't allowed to write off the portion of any premiums they pay, although amounts automatically deducted from your paycheck generally get excluded from your taxable income and don't show up in your taxable pay on your W-2 form.

Previous

Next

Source: Getty Images

13 of

12. Mileage for charitable activity

Nearly everyone knows that charitable donations are available as writeoffs for those who itemize their deductions. Cash gifts as well as gifts of property can be eligible for the deduction. But what most people forget about is that if they drive their cars as part of work they do for charitable organizations, they can write off their mileage at a rate of $0.14 per mile. Tolls and parking fees are also available, so be sure to log your mileage to document your deduction at year-end.

ALSO READ: 4 Smart Tax Moves to Make Right Now

Previous

Next

Source: Getty Images

14 of

Get all the writeoffs you deserve

The IRS gets enough of your hard-earned money without you passing up any chances to save on your taxes. Don't forget about these easily overlooked tax writeoffs, and you'll be in a better position to pay as little as possible at tax time.

The Motley Fool has a disclosure policy.

Previous

Next