Most Overlooked Tax Deductions for Middle-Income Earners
When tax season rolls around, middle-income earners often miss out on valuable deductions that could lower their tax bill—or increase their refund. Here are some of the most commonly overlooked tax deductions you should double-check before filing:
1. Student Loan Interest
Even if you didn’t personally take out the loan, if you’re repaying it for a dependent or a spouse, you might qualify to deduct up to $2,500 in student loan interest—even if you don’t itemize.
2. Educator Expenses
Teachers can deduct up to $300 for classroom supplies they purchase out of pocket. Married educators can claim up to $600 jointly, and this deduction applies even if you take the standard deduction.
3. State Income or Sales Taxes
You can deduct either your state income tax or sales tax paid throughout the year (but not both). In states with no income tax, claiming sales tax—especially on big-ticket items like vehicles—can be a smart move.
4. Job Search Costs
If you looked for a new job in your current occupation, expenses like résumé services, travel, and even career counseling may be deductible. (Note: This applies only in certain tax years or under specific conditions, so check the latest IRS guidance.)
5. Retirement Savings Contributions Credit (Saver’s Credit)
If you contributed to an IRA or 401(k), you might qualify for a tax credit—worth up to $1,000 ($2,000 for married couples)—just for saving for retirement.
Don’t Leave Money on the Table
Tax law is complex, but that’s no reason to pay more than you owe. A tax professional can help uncover hidden deductions and credits based on your unique situation—so you keep more of what you earn.