The Most Common Tax Deductions People Forget to Claim

Most taxpayers leave money on the table every year. It’s rarely intentional, but it happens when you don’t claim every tax deduction that you’re eligible for. Self-employed individuals, small business owners, and homeowners are often eligible for many more deductions than they think. 

But when you don’t take those deductions, you end up overpaying the IRS when you could have had those deductions count toward lowering your tax liability. (And we all know the IRS isn’t going to fill you in on your mistake when they don’t have to.)

You work hard for your money and deserve to keep every dollar possible in your pocket—so let’s make sure that happens.

In this blog, we’re going through:

• The most commonly missed tax deductions 

• The reasons most filers don’t claim them

• How you can prepare and ensure you claim every deduction possible

  
  

Top 10 Overlooked Tax Deductions in the Tri-State Area

You might think that the only deductions you can claim on your yearly taxes are for your children or the standard deductions. Maybe you’re right. But you also might be one of the millions of people who don’t realize they actually qualify for many more.

These are among the most commonly missed tax deductions in New York, New Jersey, and Connecticut.

1. Home Office Expenses 

Do you work remotely or have a hybrid situation? Did you have to buy office furniture or set up a new phone line to support home office work? You can likely deduct those costs come tax season.

2. Business Use Of A Vehicle 

If you use your car for work, you can sometimes deduct the total mileage you drive as well as the cost of gas or repairs. Keep in mind that this only applies when your vehicle is part of your job, such as delivery services or driving to client meetings. You can’t deduct the costs associated with your daily commute.

3. Business Expenses

If you pay for software subscriptions, bank fees, or other professional services that are necessary to run your business, these count toward profit and loss statements and can be deducted from your overall tax liability. 

Important: Remember to keep detailed records and receipts to prove these are legitimate business expenses.

4. Health Insurance Premiums 

If you pay for your health insurance premiums out of pocket as a self-employed person, you can deduct these costs during tax season. You may also be able to deduct medical expenses if they total more than a certain percentage of your income.

5. Retirement Contributions 

Contributions made to your pre-tax, traditional accounts before the filing deadline can be deducted. You can also claim “above-the-line” traditional IRA even if you take the standard deduction and don’t itemize.

6. State And Local Taxes (SALT)

Property taxes (which fall under SALT) in NY, NJ, and CT are some of the highest in the country. New limits for SALT deductions mean you can claim up to $40,000 each filing season. You can find more information on those deductions here.

7. Mortgage Insurance Premiums

If your mortgage lender required you to take out insurance on your loan, you can deduct the cost of those premiums. You can also deduct the interest you pay on your mortgage each year.

8. Charitable Donations 

If you donated to an eligible charity during the year, you can claim that deduction on your taxes. It doesn’t have to be a cash donation either. Non-cash donations, such as clothing or furniture, count as well.

9. Education-Related Deductions Or Credits

Did you need to pursue a new certification or continuing education course to remain employed? You can be eligible for tax credits or deduct the out-of-pocket cost.

10. Equipment Depreciation

If you use certain machinery or equipment that falls under Section 179 to maintain your small business, you can work out the depreciation value and claim it on your taxes.

It seems crazy that filers wouldn’t claim these possible deductions, right? Well, there are a few reasons why.

Why These Tax Deductions Are So Often Missed

There are three big reasons why you might miss these deductions—whether you know them or not.

1. Poor Record Keeping

You might feel you can’t claim certain tax deductions if you:

• Don’t have clear receipts or evidence that supports them

• Mixed business and personal expenses, and can’t figure out what’s what

• Didn’t track these expenses in the first place

  
  

2. Filing at the Last Minute

Waiting to file until two weeks before the deadline means you can:

• Limit your expense reporting to avoid issues

• Can’t dig deeper into your finances, ask questions, and find additional deduction opportunities

  
  

3. Not Working With a Tax Professional

Doing it on your own may seem easier and more affordable, but it also leads to missed deductions because of:

• A lack of tenured expertise

• At-home software limitations

• Reactive tax reporting over proactive tax planning

You don’t want to leave money on the table. So let’s make sure you don’t.

How to Prepare and Prevent Missing Tax Deductions

You can easily claim every deduction you’re eligible for with a few easy steps:

1. Stay Organized Year-Round: Keep separate accounts for business and personal expenses and income. Store receipts digitally to avoid losing them, and consider monthly bookkeeping.

2. Get Educated on Your Options: Learn what applies to you individually and as a business owner or gig worker. Explore industry or geographic-based tax deductions.

3. Don’t Go It Alone: Consult a tax expert for year-round tax planning and advice. Rely on them to proactively find every deduction possible.

   
   

AVM DeMars is Your Long Island Tax Partner

Missing tax deductions is common, but preventable. The tax experts at AVM DeMars help individuals, homeowners, and business owners in NY, NJ, and CT take advantage of every eligible deduction save you money, time, and stress.

If you’re unsure whether you’re claiming every deduction you qualify for, let us help with proactive tax planning. Reach out to our team today.