Tax season can feel like a maze, and it’s easy to miss out on valuable deductions that could put more money back in your pocket. Many people focus on the obvious write-offs, like mortgage interest or charitable donations, but there are plenty of lesser-known tax deductions that are perfectly legal and surprisingly easy to claim. If you’re looking to maximize your refund and keep more of your hard-earned cash, it pays to know what’s available. The IRS tax code is full of opportunities for those who know where to look. Let’s explore ten tax deductions you might have forgotten were legal, and see how you can take advantage of them this year.
1. Out-of-Pocket Classroom Expenses
You can deduct up to $300 of unreimbursed classroom expenses each year if you’re a teacher, counselor, or classroom aide. This includes supplies, books, and even some professional development courses. Many educators spend their own money to create a better learning environment, and this tax deduction is a small way to recognize that effort. Make sure to keep your receipts and document your purchases, as the IRS may ask for proof.
2. State Sales Tax
Did you know you can choose to deduct either your state income tax or your state sales tax? This is especially helpful if you live in a state with no income tax or if you made big purchases, like a car or major appliances. The IRS even provides a handy calculator to help you estimate your deduction. This legal tax deduction can add up quickly, especially for those who made significant purchases throughout the year.
3. Medical Miles
Most people know they can deduct medical expenses that exceed 7.5% of their adjusted gross income, but did you know you can also deduct the miles driven for medical care? For 2024, you can deduct 21 cents per mile for trips to the doctor, pharmacy, or hospital. Keep a log of your trips and mileage, and don’t forget to include parking fees and tolls. This often-overlooked tax deduction can make a real difference if you or your family have frequent medical appointments.
4. Student Loan Interest Paid by Someone Else
If someone like a parent pays your student loan interest, you can still claim the deduction as long as you’re not claimed as a dependent. The IRS treats the payment as if it were given to you, and then you paid the lender. You can deduct up to $2,500 in student loan interest, which can help lower your taxable income. This is a great example of a legal tax deduction that many recent graduates overlook.
5. Jury Duty Pay Given to Your Employer
If your employer pays your full salary while you serve on jury duty, but requires you to turn over your jury duty pay, you still have to report the jury duty pay as income. However, you can deduct the same amount on your tax return, effectively canceling it out. This legal tax deduction ensures you’re not taxed twice for fulfilling your civic duty.
6. Home Office for Side Hustles
The home office deduction isn’t just for full-time freelancers or remote workers. If you have a side hustle or small business, you may qualify for this deduction—even if it’s just a part-time gig. The space must be used regularly and exclusively for business, but it doesn’t have to be a separate room. You can deduct a portion of your rent, utilities, and even internet costs. This legal tax deduction can be a game-changer for anyone earning extra income from home.
7. Tax Preparation Fees (Certain Situations)
While tax preparation fees are no longer deductible for most individuals, they are still deductible for self-employed taxpayers, freelancers, and small business owners. If you fall into one of these categories, you can deduct the cost of tax software, e-filing fees, and even the cost of hiring a professional. This deduction can help offset the cost of getting your taxes done right.
8. Charitable Mileage
If you volunteer for a qualified charity, you can deduct 14 cents per mile driven in service of that organization. This includes driving to and from volunteer events, delivering goods, or transporting people on behalf of the charity. Keep a detailed log of your trips, and remember that parking and tolls are also deductible. This legal tax deduction rewards those who give their time as well as their money.
9. Job Search Expenses (If You’re Self-Employed)
If you’re self-employed and looking for new clients or gigs, you can deduct job search expenses like travel, resume services, and even some networking event fees. While this deduction is no longer available for most employees, it remains a valuable legal tax deduction for freelancers and independent contractors. Keep detailed records of your expenses to make the most of this opportunity.
10. Retirement Savings Contributions Credit
The Saver’s Credit is a little-known tax break for low- and moderate-income taxpayers who contribute to a retirement account. You could get a credit of up to $1,000 ($2,000 for married couples) just for saving for your future. This legal tax deduction is in addition to the regular deduction for IRA contributions, making it a double win for retirement savers.
Make the Most of Every Legal Tax Deduction
Maximizing your tax refund isn’t about bending the rules—it’s about knowing them. These legal tax deductions are often overlooked, but they’re available to anyone who takes the time to understand the tax code. By keeping good records and staying informed, you can make sure you’re not leaving money on the table. Review this list the next time you file and see which legal tax deductions apply to you. Your wallet will thank you!
What’s the most surprising legal tax deduction you’ve ever claimed? Share your story in the comments below!
Read More
Taxes for Entrepreneurs: How to File Business Taxes for the First Time
How to Pay Taxes on 1099 Income
The post 10 Tax Deductions You Forgot Were Legal appeared first on The Free Financial Advisor.
