Seven Things You Didn’t Know but Can Claim on Your Taxes
In addition to the fact that our taxes are damn high, they are also damn complex—more complex than tax codes in other countries. Individuals spend an average of 13 hours preparing their tax returns each year, and even so, the Internal Revenue Service (IRS) is reporting 17 million errors in 2022 alone. Adding to this complexity is the fact that the tax code changes every year. It’s no surprise that most people have to rely on tax preparation software or an expensive accountant to do their taxes.
Worst of all, the complexity of our tax system means we are doomed to miss out on opportunities to save money. There are many things you can claim as deductions on your taxes, especially if they are professional expenses (for example, a bodybuilder managed to deduct nearly $14,000 on his taxes for a body oil he bought) or medical expenses (if you have a fortune, where you can benefit from installing a pool in your backyard (for example, you can claim the pool as an expense.) But there is a short list of things you can claim on your taxes that will likely come as a complete surprise to you.
Ransoms
When you hear the word ransom, you might think of kidnapping billionaires or celebrities (or their very expensive dogs), but these days we’re all potential victims of ransomware , which encrypts the hard drive and demands payment for the key. If you’re the victim of a scam like this, there’s at least a small silver lining: your ransom is likely tax-deductible , especially if it’s related to a business (and if you’re a freelancer of sorts, remember, you’re a business). This is because ransom is considered a form of theft. You may have to prove that the ransom was paid, but getting at least some of your money back could save you some trouble.
Pets
No, you can’t just provide all of your pet’s veterinary and food bills. But if you can plausibly claim that your pet serves some official function, you can probably claim at least part of the cost of its care. For example:
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If your pet is legally a service or emotional support animal, you may be able to claim taxes on it . However, you can’t just claim that your dog is an “emotional support” animal—you’ll need a valid diagnosis for that to work.
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If you purchased an animal to perform a specific function, such as a guard dog or a cat brought in to get a local mouse problem under control , you can probably claim their upkeep as a business expense (sorry, even if your ferocious barking husky doesn’t give you peace). home safe at night, it probably won’t fly as a personal deduction). Keep in mind that the breed of dog will make a difference here: the IRS won’t trust your tiny, quivering lap dog to keep your home or business safe.
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If you need to move because of a job change, depending on how far you have to move and how many hours you work at your job, you may be able to claim your pet’s moving expenses on your taxes.
Sales tax
It’s a little confusing, but you can claim your taxes on your federal taxes. If you’ve heard of the state and local taxes (SALT) deduction, you may know that you can claim taxes paid to state or local governments . But you may be able to claim sales tax instead (usually you can’t claim both). The decision to claim sales taxes instead of other taxes depends on a) whether your state has an income tax and b) how much sales tax you paid last year. If you made a large purchase and received a huge sales tax bill on it, this may be the right move.
Medical insurance
If you’re self-employed, you’re familiar with the horrors of finding and paying for your own health insurance. Even after the Affordable Care Act of 2014 and the American Rescue Plan Act of 2021, it’s still a lot of money and you really have no choice but to pay. The good news is that if you’re self-employed, you can also deduct 100% of your health insurance premiums , which can actually reduce the amount of federal tax you owe.
Selling a house
Did you sell your home last year? You probably know that you can exclude $250,000 of the sales price from your income ($500,000 if you’re married filing a joint return). But you can also reduce your taxable income from the sale by paying for most of the expenses you incurred in selling your home, including:
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Commissions paid to real estate agents
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Legal services
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Bank and escrow fees
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Advertising expenses
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Home staging
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Repairs and renovations if completed within 90 days of closure.
Gambling losses
The idea of getting something for your gambling losses seems to go against the very idea of what gambling is, but here it is: if you’re a “casual gambler” (i.e. you don’t gamble for a living), Exactly Just as you must declare your winnings as income, you can declare your losses as taxes . The main thing to keep in mind is that you can only claim losses up to the amount of your winnings (so if you won $50,000 last year but lost $75,000, you can only claim losses up to $50,000) – and you must have receipts.
Bad debts
You don’t have to be a business owner to qualify for bad tax debt. If you borrowed money or paid for a service you didn’t receive, you can claim the loss on your taxes as a reduction in non-business bad debts. You must be able to prove the debt exists, prove that you made a good faith effort to collect it, and provide a detailed description. If it’s money you lent someone, you’ll also have to convince the IRS that it was a loan and not just a gift you regretted – and gifts are not taxable. This usually means that interest will be charged or that you have a document outlining the terms of the loan.