Save on your taxes with these little-known deductions

If you’re like most people, you’d much rather do anything but file your taxes. The situation is different if you’re the one eagerly anticipating a refund.

Either way, these unfamiliar or forgotten tax deductions might add up in your favor. Here’s where to look:

Childcare costs

If you have a child under 13, you might already know that you’re allowed to claim a credit for money you spend on child care while you’re at work. But you might not realize that summer camp costs also qualify. “Sleepaway camp would not count,” says Joshua Zimmelman, president of Westwood Tax & Consulting in Rockville Centre.

Expenses for charitable work

It’s not news that you can deduct most monetary donations that you made to eligible charitable organizations, and you might already know that noncash donations of goods are also deductible. “However, many people aren’t aware of the fact that you can deduct expenses that you incur while volunteering, including mileage driven or other transportation costs. But you can’t deduct the time you spend volunteering,” says Zimmelman.

Pet perks

You might be able to cash in on your beloved Fido or Fluffy. No, you can’t claim your pet as a dependent, but if you use your pet for business, you can deduct some of their expenses.

You’ll need documentation of how they’re related to your business (e.g., if you breed your pet for profit, you take photos of them for your company’s advertising materials, you use them to guard your business, etc.). Keep track of the hours that they “work,” just as you would a human employee. You can deduct expenses only related to the hours that they’re working.

‘You might even be able to deduct mileage if your pet’s work requires you to drive them around. This only applies to certain animals in certain situations though. For example, you can say that a Rottweiler is a watchdog but don’t try that with a hamster or you will probably raise a red flag at the IRS,” says Zimmelman.

You can also deduct expenses for the care of a service animal as part of your medical expenses. You’ll need to show documentation of a diagnosis that requires a service animal and meet specific thresholds for deducting medical expenses.

Education and medical expenses

One thing many people missed this year is that the so-called tax extenders actually got extended. These are tax breaks that need reauthorization from Congress each year. At the end of 2019, lawmakers renewed them through 2020.

They include the "above-the-line" deduction for tuition and fees, as well as a provision that lets you include mortgage insurance premiums in your mortgage interest deduction, says Andrea Coombes, a tax specialist with NerdWallet.com. Above-the-line deductions are those you can claim even if you take the standard deduction and don't  itemize, she said. 

On tuition and fees, you can deduct up to $4,000 in qualified education expenses, which for this tax perk doesn’t include room and board. There are income limits that prevent high-income people from claiming it.

Note that many online sources, including some IRS.gov pages, have incorrect information about this and other “extenders” provisions — that is, they incorrectly state that they aren’t available for 2019 returns. See this IRS.gov page for the correct info: nwsdy.li/IRS.

The extenders also brought good news for taxpayers with big medical expenses: To deduct them, those expenses need to exceed 7.5% of your adjusted gross income, down from the 10% threshold before.

In case you forgot

Don't forget that ever since the Tax Cuts and Jobs Act went into effect in 2018, claiming the standard deduction, rather than itemizing, makes more sense for more people. That law nearly doubled the standard deduction.

For 2019, the standard deduction for single filers is $12,200 and for married-filing-jointly it’s $24,400. “For it to make sense to itemize, your deductible expenses have to add up to more than the standard deduction. That’s good news because claiming the standard deduction makes tax filing a lot easier — you don’t have to gather a lot of receipts and other information,” says Coombes.

Another reason more people may choose the standard deduction: the new $10,000 cap on claiming state and local taxes. That includes property taxes, so Long Islanders with big property tax bills can’t claim the entire amount.

Any taxpayer who has property taxes and other deductible expenses needs to do the work to add those up to see if they’re bigger than the standard deduction, Coombes says.