We’re less than a month away from the tax deadline—if you haven’t filed yet, we’d like to encourage you to make the most of your tax return. Many young people aren’t even aware of how many deductions are out there, let alone taking advantage of them.
What’s the First Step?
For starters, you’ll only want to turn in an itemized deduction list (Schedule A) if your deductions total more than 2% of your Adjust Gross Income. Otherwise, you’ll just be taking the standard deduction. If your AGI is $50,000, for example, your itemized deductions must be more than $1,000 to qualify you for more than the standard deduction. We encourage taxpayers to calculate their tax return both ways and see which has the greater return.
What Are Some Unexpected Deductions?
That said, there are a lot of things people aren’t aware they can count as tax-deductible. Here are some of the most commonly overlooked deduction possibilities:
- Interest on Student Loans
In fact, your student loan interest can be deducted even if you don’t itemize. However, it’s still in your best interest to pay as much as possible and on the loans with the highest interest.
- Car Registration Fees
In many cases your car registration fees can be counted as deductions, which is great news if you’re still bitter about how much it cost to get your license plates. Check here to see if you’re eligible, and for how much.
- Studio Space
Do you rent a space related to your work or hobby? If you’re an artist, dancer, designer, musician, etc. leasing a studio or practice room, write it off!
- Job Hunting
Most expenses you incur while searching for a job within your field are deductible, including any printing costs, resume design, placement agency fees, or travel for interviews.
If you lost personal property through fraud or theft, you can claim it on your return, and this isn’t just limited to property you use for your business. If your laptop, bicycle, or earrings were stolen, and you have the police report to prove it, you can claim it.
This doesn’t just mean college—if you take a community course in something you add to your resume, like graphic design, photography, or typing, you can apply your Lifetime Learning Credit and deduct it. If you’re taking courses at an accredited school, your tuition, fees, and even textbooks are all deductible.
- Research Materials
If you’re making money from your hobby—even if it’s precious little—you can consider it a business venture, meaning any “research” you do is tax deductible. If you’re a writer, buying books, seeing plays or movies, or going to museums can all be written off if the experience relates to your work. If you’re a musician, you can deduct going to shows or subscribing to music magazines. Just be prepared to justify how any expense contributes to your understanding of your business!
- Renting Your Home
You can rent out your home for up to 14 days a year tax-free. If you’re lucky enough to have a great property located next to a temporary hot spot, like a New Orleans home during Mardi Gras, a great apartment near the Superbowl stadium, or a beach house on the 4th of July, you can rent for up to two weeks without owing the IRS a dime—and this includes Airbnb! Most people don’t itemize their expenses when filing taxes—only about 35% of Americans, in fact, and the numbers look even worse when you look at the lower end of the income spectrum. For Americans earning less than $50,000 annually, only about 17.9% itemize, as opposed to 93.3% of those earning $200,000 or more. One of the best financial decisions young or lower-income Americans can make is keeping detailed records of their expenses and asking for their due course come April 15th. For more financial advice that can help you achieve financial stability and independence, check out our Earn It Use It eBooks!