While most of us are familiar with the common tax deductions like mortgage interest, charitable donations, and retirement contributions, there are plenty of unexpected deductions and other little-known uses for pre-tax money.
Tax deductions you might not be aware of
Andy Phillips, Director of H&R Block’s Tax Institute, says that with the April 15 deadline fast approaching, his tax experts are getting plenty of unconventional questions from filers looking to maximize every deduction available to them. Phillips shared some of the strangest tax deductions people have claimed and actually gotten away with:
Gambling losses. While gambling winnings are taxable income, the IRS allows taxpayers to deduct their gambling losses up to the amount of their winnings. This deduction is often claimed by professional gamblers and those who frequent casinos.
Snacks. Daycares can deduct set amounts for the breakfast, lunch, and snacks provided to children in their care.
Your pool or hot tub. If you are self-employed and use your backyard pool or hot tub to entertain clients or employees, you may be able to deduct a portion of your operating costs and even the initial installation. Just make sure to carefully document the business uses.
Tampons. Menstrual care products like tampons and pads are qualified expenses you can pay with your health savings account.
Pet food. For the most part, deducting medical expenses for pets is not allowed as a medical expense on your tax return. The only exception would be when an animal is a certified service animal, like a guide dog, to assist you. Service animals generally aren’t considered pets though. If you have a physical disability or are hearing or visually impaired, you can deduct medical expenses for your pets if they are certified service animals. Expenses that may be covered include purchasing, training and maintenance of the animal which includes food, grooming and medical care.
Some cosmetic surgeries. A taxpayer can deduct as medical expenses amounts paid for cosmetic surgery necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. Breast reconstruction after cancer is an example of a deductible surgery. Vision correction surgery is another example of a deductible procedure.
Clarinet lessons. Believe it or not, the IRS has allowed deductions for clarinet lessons as a medical expense in certain circumstances where the lessons were recommended by a doctor to help treat a health condition like stammering or neurological issues. You’ll need a physician’s letter to claim this one.
EV chargers. If you install an electric vehicle charger in your home, you may be eligible for a tax credit.
Construction expenses. If you build a house, construction expenses you can include in the basis of your home include land, materials, architect fees, building inspection fees, and building permit fees.
Phillips shares some more unexpected facts about deductions; for instance, people who are wrongfully incarcerated may be able to exclude settlement money they receive to compensate them. If you’re at least 65 years old or blind, you can claim an additional standard deduction on your tax return. And if you’re just starting to repay your student loans for the first time, you might not know that most taxpayers can deduct up to $2,500 of student loan interest payments each year.
Remember to keep accurate records and consult with a tax professional if you have any questions or concerns. While the above deductions might not apply to you, there are still plenty of deductions to make sure you’re taking advantage of—like home office perks or retirement contributions. And if you want to avoid the April 15 scramble, be sure to check out the best filing services for 2024.
