Personal Insights

5 overlooked tax deductions and credits

Arm yourself with knowledge because you may not owe Uncle Sam as much as you think.

When it comes to filing your taxes, it’s important to make sure you’re taking advantage of every write-off available to you.

Most taxpayers now take the standard deduction (worth $14,600 for single filers and $29,200 for married taxpayers filing jointly in 2024), but in some cases, itemizing deductions could lower your bill. Even those who don’t itemize should make sure they’re not missing out on any tax credits, which can also reduce what you owe.

Plus, if you’ve recently made a big change in your life, such as moving to a new state, getting married or divorced, or having a child, you may have unlocked additional tax savings opportunities.

While your tax advisor can help you determine which tax rules apply to you, here’s a look at some commonly overlooked credits and deductions to which you might be entitled.

Charitable contributions

Who qualifies: Anyone who itemizes taxes and donated to a qualified nonprofit in 2023.

The details: In general, you can take a deduction equal to the amount given to qualified charities up to 60% of your adjusted gross income for the year.

What often gets overlooked: Taxpayers may not know they can write off the value of non-cash donations like housewares or furniture. Just keep in mind you’ll need a third-party appraisal for any item worth more than $5,000. In addition, there are write-offs for expenses associated with volunteering that you may want to explore.

Medical expenses

Who qualifies: Taxpayers who itemize and have medical expenses that amount to more than 7.5% of their adjusted gross income paid with after-tax dollars.

The details: The write-off kicks in for expenses above the 7.5% threshold. So, for example, if you have an adjusted gross income of $50,000, you could deduct any expenses after the first $3,750.

What often gets overlooked: Many taxpayers don’t bother calculating their medical expenditures. But if you’re claiming it, the deduction covers a wide range of often-overlooked costs, including family dental and orthodontic expenses, health insurance premiums and even parking expenses for doctor’s visits.

Child and dependent care tax credit

Who qualifies: Parents and caregivers with earned income who have out-of-pocket expenses for children younger than age 13 or adult dependents who need paid care.

The details: The amount of the credit depends on your income and the number of dependents you have. In general, you can claim between 20% and 35% of work-related childcare expenses (the lower percentage is for higher earners) for payments of up to $3,000 for one dependent or a total $6,000 for two or more dependents.

What often gets overlooked: The type of care that qualifies may be broader than you think. Many after-school programs, babysitting expenses if the provider has a tax ID and day camps qualify, as long as you’re working while your child is in care.

Lifetime learning credit (LLC)

Who qualifies: Students taking undergraduate, graduate or professional learning classes who are not claiming the American Opportunity Tax Credit (AOTC).

The details: You can claim up to 20% of the first $10,000 spent on qualified education expenses. The credit starts to phase out once your income reaches $80,000 as a single filer or $160,000 for couples, and those making more than $90,000 or $180,000 as a couple cannot claim it at all.

What often gets overlooked: Many filers know about the AOTC, which applies only to undergraduate tuition, but they’re often not aware of the LLC, which is more flexible.

Gambling losses

Who qualifies: Taxpayers who itemize their taxes and have gambling wins.

The details: Gambling wins are subject to ordinary income tax, but you can claim losses to reduce the total amount of winnings on which you owed taxes.

What often gets overlooked: Gamblers may not keep track of their losses as closely as they do their winnings, meaning they may miss out on this deduction.

Start today

• Learn more: Find out what actions are likely to trigger an audit.
• Take action: Review our tax checklist to make sure you’re prepared for your next filing.