Every filing season, our team sees the same pattern: taxpayers who assume they've claimed everything they're entitled to, only to discover — sometimes years later — that they left real money on the table. Deductions don't apply themselves. If you don't know to look for them, or don't keep the records to support them, the IRS certainly isn't going to remind you.
Here are ten of the most commonly missed deductions we encounter with individual and family clients, along with what to watch for as you prepare for your own return.
1. State sales tax instead of state income tax
If you live in a state with no income tax, or you made a large purchase like a car or boat during the year, you may come out ahead by deducting state and local sales tax instead of income tax. Most filers default to income tax without ever comparing the two.
2. Student loan interest
You can deduct interest paid on qualified student loans even if you don't itemize, as long as your income falls under the applicable phase-out range. Many taxpayers assume this deduction disappeared with the standard deduction increase — it didn't, and it's worth checking every year.
3. Home office expenses for the self-employed
If you're a freelancer, contractor, or small business owner who works from a dedicated space in your home, a portion of your rent or mortgage interest, utilities, insurance, and depreciation may be deductible. This deduction is only available to the self-employed, not W-2 employees, but it's frequently underclaimed by those who do qualify.
4. Charitable contributions beyond the checkbook
Cash donations are the easy ones to remember. What taxpayers routinely miss:
- Mileage driven for volunteer work
- Non-cash donations — clothing, furniture, and household goods dropped off at donation centers
- Out-of-pocket expenses incurred while volunteering for a qualified organization
Keep receipts and a simple log. Without documentation, these deductions won't survive a closer look.
5. Medical and dental expenses above the threshold
Unreimbursed medical expenses are deductible once they exceed a percentage of your adjusted gross income. Most people assume they'll never clear that bar and stop tracking expenses altogether — but a year with a major procedure, orthodontia, or long-term care costs can change that math quickly.
6. IRA and retirement catch-up contributions
Contributions to a traditional IRA can reduce your taxable income, and the deadline for prior-year contributions typically extends past December 31 — often up to the filing deadline. If you're 50 or older, catch-up contribution limits give you even more room. This is one of the few deductions you can still influence after the calendar year has ended.
7. Educator expenses
Eligible K-12 educators can deduct qualifying out-of-pocket classroom expenses, even if they don't itemize. It's a modest deduction, but one that's frequently overlooked simply because taxpayers don't realize it applies to them.
8. Dependent care benefits and credits
Between the Child and Dependent Care Credit and employer-sponsored dependent care FSAs, working parents have more than one lever to pull. We regularly see families use only one when they qualify for both — leaving a meaningful credit unclaimed.
9. Tax preparation fees for self-employed taxpayers
If you file a Schedule C, the cost of having your business return prepared is generally deductible as a business expense — even though the same fee is no longer deductible for a purely personal return. Many self-employed filers don't split this out correctly.
10. Residential energy improvements
Certain energy-efficient home improvements — insulation, windows, doors, heat pumps, and solar installations — can qualify for tax credits. Homeowners who made upgrades during the year often don't connect the dots between the renovation and the tax return.
The real cost of missing these
Individually, some of these deductions are modest. Together, across even a handful of years, they add up to real money — money that's harder to recover once a return has already been filed. And because eligibility rules, income thresholds, and dollar limits change from year to year, what applied to you last year may look different this year.
The safest approach isn't memorizing a list — it's having someone who reviews your full financial picture before you file, not after.
If it's been a while since a professional looked closely at your return, it's worth a second set of eyes. We'd be glad to take a look.
