A tax deduction reduces the amount of income you earn that is subject to federal income tax, and a tax credit reduces your tax bill once you’ve calculated how much you owe. Here are a few of the more interesting tax credits and deductions that you can claim.
1. Service animals
According to the IRS, service animals that support a physical or emotional condition are an approved medical expense.
This means you can deduct the costs related to having a service animal — as long as you’re not being reimbursed by insurance. This includes what you spend to buy and train your animal, plus food, grooming, and veterinary care. Learn more.
2. Certain subscriptions
Yes, it’s true: some subscriptions are tax deductible. If you are self-employed, you can deduct subscriptions that are considered ordinary and necessary to your business. That includes web hosting subscriptions, professional magazines and journals, but also office supply delivery services (like Amazon Prime) and more. Learn more about this deduction and the different subscriptions that qualify.
3. Summer camp
Do your kids attend childcare or camp when school is out? You may be able to claim a tax credit to offset your summer camp or childcare expenses. To qualify, you (and your spouse if you file as married) must be working full-time or seeking employment, or enrolled in school as a full-time student. You can claim the credit for any children under the age of 13, and it applies to day camp, daycare, or in-home care provided by a babysitter (just not a family member – sorry).
4. Property damage
Any damage to property that was caused by federally declared disasters can be written off on your tax return. You may be eligible for this deduction if you or your tax records are within the designated area. Keep track of any damage your property acquires during the disaster to write it off on your taxes.
Were you impacted by a natural disaster? Find out if it is covered here.
5. Energy upgrades
If you make energy efficiency improvements to your home, you could claim the Residential Renewable Energy Credit. worth up to 30 percent of the cost to purchase and install alternative energy equipment. Examples of qualifying green home improvements include solar electric systems, solar water heaters, fuel cells, small wind energy property, and geothermal heat pumps.
6. Unreimbursed medical expenses
To help offset the costs of healthcare, several of the expenses that are directly related to treatment can be written off on your return. If you pay for medical, dental, vision, and preventative care out of your pocket, you can deduct expenses that are more than 10% of your AGI.
The costs of prescriptions and appointment co-pays can add up, but there are additional costs you might not think about, including:
- Weight loss – If your doctor recommended a weight loss program, you can write off the fees on your tax return.
- Swimming pool – If your doctor recommended you swim regularly for treatment or your health in general, and you install a pool on your property, you can write off the expense on your return.
- Smoking – You can deduct expenses related to cessation programs and prescription medication if you are trying to quit smoking.
7. Jury pay
Were you required to serve jury duty this year? If so and you received compensation, remember that jury duty income is taxable.
Many states require employers to provide at least some pay to workers on jury duty. If your employer paid your full salary while you were on jury duty, they might ask you to give your jury fees to them in return. In this case, you would report your jury duty compensation as income. Then, claim a tax deduction for the amount of jury duty pay that you gave to your employer.
8. State tax
Forty-five states and the District of Columbia charge income tax at the state level. If you owed taxes when you filed your state return last year, you can write off that amount as an itemized deduction on your return this year. The deduction falls under state and local taxes.
TaxSlayer will help you uncover all the credits and deductions you deserve. Log in or create a new account, and start filing for free today.
This article is up to date for tax year 2021 (returns filed in 2022).
