The tax code is more than 75,000 pages long, so it’s no surprise there are many deductions taxpayers overlook each year. Taking a few extra minutes to review often-forgotten deductions could mean a bigger refund or lower tax bill than expected.
Here are some of the most commonly overlooked deductions for individuals and small business owners.
You can choose to deduct state and local sales taxes rather than state income taxes on a return using itemized deductions. This is especially useful for residents of states that don’t have state income taxes. It can also be used if you made enough purchases during the year that your state sales tax deduction is larger than your state income tax deduction. This is especially important this year as the limit for this itemized deduction category moves from $10,000 to over $40,000!
When you buy a home you can generally deduct the cost of mortgage discount points to lower your interest rate. A point is a fee equal to one percent of the mortgage amount and it lowers your mortgage’s interest rate. When you refinance a mortgage, you spread the cost of your points over the life of the mortgage. Many taxpayers forget that when they sell their home they can immediately deduct the remainder of the points not yet used as a deduction.
You can deduct up to $2,500 in interest paid on student loans from your tax return. This is true even if someone else helps you pay your loans. Parents who have co-signed student loans (creating legal obligation for the debt) often forget that they are also now eligible for the deduction on payments made by them.
While most people who pay alimony know it’s tax-deductible for those who pay it on divorce decrees finalized before the end of 2018, it is easy to forget it is NOT taxable income to those receiving it if your divorce was after this date OR there was an amendment to your divorce decree after this date. And remember this law change also impacts the taxability and deductibility of child support payments.
Many automatically reinvest their dividends within their portfolios. These dividends are taxed when they are paid to you each year, so it is easy to forget to make this adjustment to your tax bill when you sell them at a later date. While this makes your capital gain calculation a bit complex, knowing this keeps you from paying too much in tax.
If you are working and paying for daycare, review this credit on your tax return and with your employer. Both may offer a meaningful tax benefit to you. The same holds true for married couples when both work or are looking for work. And if the benefit exists through your employer, you may still be able to take advantage of the credit through the IRS as long as the qualified expenses are not double counted.
There are many commonly overlooked benefits for sole-proprietors and S corporation business owners. Chief among them are;
There are a number of other special business incentives built into the tax code. This includes special depreciation rules to the now-permanent research credit.
As with any part of the tax code, certain qualifications must be met and limits apply. Reviewing your situation or speaking with a tax professional can ensure you’re applying these deductions correctly.
Even if you think you might have overlooked something, proper documentation and proactive planning can protect you:
Failing to claim deductions you are entitled to may increase your tax bill unnecessarily, while claiming incorrectly could trigger an IRS inquiry.
Our team of tax professionals helps clients identify overlooked deductions, apply complex rules correctly, and ensure every eligible credit and deduction is captured.
Visit alloysilverstein.com/tax-season to download our Individual Tax Return Checklist and get organized for 2026 tax season.
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