With this year’s tax filing deadline quickly approaching, some Americans might be scrambling for last-minute deductions to claim. Tax pros suggest three possible places to look for a solution: charitable giving, medical bills or your side hustle.
Filers can lower their taxable income by donating to an eligible charity, said Jennifer Streaks, senior personal finance reporter at Business Insider. Self-employed Americans who primarily work from home can also write off portions of their rent, utilities, home repairs and internet service, she said.
Streaks said medical expenses that your insurance doesn’t cover are another potential deduction.
“If, last year, you had unreimbursed medical expenses — if you’re paying for your own dental work, like a root canal or teeth cleanings, or prescription eyeglasses or contact lenses, and that meets a certain amount, you can deduct that from your taxable income,” she told CBS News.
Under U.S. tax law, filers can deduct out-of-pocket medical expenses that are more than 7.5% of their adjusted gross income. Taxpayers can also deduct up to 60% of their adjusted gross income as gifts to charities.
Filers can write off some business-related expenses under the home office deduction, but that option is only available for the self-employed. Taxpayers who work from home but receive a regular paycheck from a company, nonprofit or government agency can’t take advantage.
Finding as many deductions as possible might be even more crucial this year as the IRS has warned Americans to expect a lower average refund. In the 2022 filing season — for tax year 2021 — the average refund was almost $3,200. But so far this year, the average refund is down nearly $300, to $2,910, because federal pandemic aid and more generous tax credits have expired.
Americans can expect to see their refund within 21 days, but it could be longer if someone filed a paper return, the IRS said.
Taxpayers who don’t think they can meet the April 18 filing deadline can get an extension to October 16 by submitting a Form 4868.
