Key Takeaways
- Keeping good records of your everyday purchases and bills can help you maximize your tax refund.
- Medical expenses such as premiums, co-pays, and medical aids may be deductible if you itemize your deductions.
- Childcare expenses may qualify for a credit if they are paid to enable you or your spouse to work or look for work.
- Unreimbursed work-related expenses may be deductible for tax years prior to 2018.
Keeping good records
If you're looking to lower your taxable income and increase your potential for a tax refund, a great place to start may be by looking at the purchases you already make and the bills you already pay each year. You may be surprised to find that some of these everyday purchases and bills are actually tax-deductible.
Medical expenses
While you may have heard that medical expenses are deductible on your personal income tax return, you may be wondering exactly which expenses qualify. To deduct your medical expenses, you'll have to itemize your deductions.
Qualified deductions include any of the following expenses paid for yourself, your spouse, your dependents, and any children that you could have claimed but didn't because of a divorce or separation agreement or because their income was too high:
- premiums for medical, dental, long-term care, vision, Medicare Part B, and Medicare Part D insurance that you are not reimbursed for and that are not paid using pretax dollars
- co-pays for medical, dental, or vision care
- the cost of eyeglasses, contact lenses, prescription medicine, breast pumps or other lactation aids, crutches, hearing aids, braces, wheelchairs, and other medical aids, all costs associated with guide dogs, and medical exam or test fees
- acupuncture, chiropractic services, podiatrists, sessions with a psychiatrist or psychologist, and occupational and physical therapy
- nursing care, hospital stays, programs to help you stop smoking, and weight-loss programs for the treatment of obesity or another condition diagnosed by a doctor
- the cost of parking fees, tolls, transportation, and mileage for the trip to and from appointments with any of these medical professionals, transportation via ambulance to a medical facility, and the cost of overnight hotel stays for treatment that is received out of town
Childcare expenses
You may be able to receive a credit for child or dependent care expenses paid to a babysitter, daycare, day camp, after-school program, or other care provider. If the care is provided in your home, additional expenses may also qualify, such as the cost of a maid, cook, or housekeeper hired to provide services or care for your child or dependent.
These expenses only qualify if you paid them to enable you (and your spouse if married) to work or look for work. In order to qualify, you and your spouse must both have earned income, unless your spouse is disabled or a full-time student.
You can collect this credit for one of the following types of dependents:
- a child under the age of 13 who you claim as a dependent
- a disabled spouse or dependent who is physically or mentally unable to care for themself
Unreimbursed work-related expenses
If you itemize deductions and you know you have to pay for work-related expenses, you should start saving those receipts. For tax years prior to 2018, the IRS allows you to deduct unreimbursed work expenses including the cost of tools, equipment, supplies, required uniforms that are unsuitable for wear outside of work, protective gear, professional dues such as union dues or membership to professional organizations, subscriptions to professional journals, and even expenses you pay when looking for a new job in your current field.
You may also be able to deduct fees spent on certain training and education expenses related to your field, business use of your home, and mileage driven with your personal vehicle for work purposes other than commuting.
Beginning with the 2018 tax year, unreimbursed employee expenses are no longer deductible for federal taxes. Some states still allow the deduction of these expenses.
TurboTax Tip:
Self-employed individuals should save receipts from every purchase related to their business and keep track of all utility bills, rent, and mortgage information for consideration at tax time.
Self-employment expenses
When you are self-employed, many of the expenses you pay for materials, supplies, marketing, office expenses, insurance, and travel can be deducted when you file your income taxes. Certain utilities and expenses for operating a business from your home may also qualify.
For self-employed individuals, it is often helpful to save receipts from every purchase you make that is related to your business and to keep track of all of your utility bills, rent, and mortgage information for consideration at tax time.
Other expenses
There are a few other receipts that you may want to save, depending on your personal tax situation. For some, it is beneficial to deduct your state and local sales tax on your itemized deductions, rather than the amount of state and local income taxes you paid during the year. Typically, the deduction of sales tax only benefits a person with one or more large purchases for the tax year—such as a car, boat, RV, or home addition—that led to a greater amount of sales tax paid than the amount of income tax withheld or when you live in a state that does not have a state income tax. If you meet this description, you'll want to save all sales receipts.
With TurboTax Live Full Service, a local expert matched to your unique situation will do your taxes for you start to finish. Or, get unlimited help and advice from tax experts while you do your taxes with TurboTax Live Assisted.
And if you want to file your own taxes, TurboTax will guide you step by step so you can feel confident they'll be done right. No matter which way you file, we guarantee 100% accuracy and your maximum refund.
