Quick overview

Many taxpayers assume the deductions in popular articles apply to everyone. That leads to missed savings and, sometimes, audit risks when people claim items incorrectly. Below I correct common misconceptions I see in practice and explain who can legitimately claim the most frequently overlooked deductions, what documentation to keep, and how to avoid common mistakes.

Why these deductions matter

Deductions reduce your taxable income. Even relatively small, legitimate write-offs can lower your effective tax rate or preserve tax credits that phase out at higher incomes. In my 15 years preparing returns and advising clients, careful documentation and targeted review of these specific categories have produced meaningful refunds and smaller tax bills for many households.

Commonly missed deductions (and who actually qualifies)

  1. Home office deduction
  • Who typically qualifies: self-employed taxpayers (Schedule C filers), independent contractors, and owners of pass-through businesses who use part of their home exclusively and regularly for business. (IRS Publication 587 explains business use of your home.)
  • Who usually cannot: employees working from home for an employer generally cannot claim the home office deduction on their federal individual return because the deduction for unreimbursed employee business expenses was suspended for most employees under the Tax Cuts and Jobs Act (TCJA) for tax years 2018–2025.
  • What you can deduct: a portion of mortgage interest or rent, utilities, homeowners insurance, and depreciation (regular method) or a simplified rate per square foot (simplified method). Use the method that nets the larger deduction, and keep precise floor-plan measurements, dates of use, and expense records.
  • Practical note from my practice: many small-business clients underestimate the documentation the IRS expects. I recommend keeping a simple floor-plan, photos of the workspace, and a monthly log of business hours in case of questions. See our in-depth guide to the home office deduction for documentation strategies and calculation methods.

(Internal link: Home Office Deduction: https://finhelp.io/glossary/home-office-deduction/)

  1. State sales tax versus state income tax
  • What it is: taxpayers who itemize can elect to deduct state and local general sales taxes instead of state and local income taxes on Schedule A. This can help taxpayers in no-income-tax states or those who made large purchases subject to high sales tax.
  • Important limit: the combined state and local tax (SALT) deduction — which includes either state income tax or sales tax, plus property taxes — is capped at $10,000 ($5,000 for married filing separately) through 2025. That cap often limits the practical benefit of deducting sales tax for high-tax households.
  • Documentation: keep receipts (especially for big-ticket items), vehicle purchase paperwork, and records showing tax paid on home improvements. The IRS also offers tables and a sales-tax calculator if you don’t want to add every receipt.
  • Practitioner tip: run both calculations (state income tax vs. sales tax) to see which produces the bigger deduction, but always factor in the SALT cap.

(Internal link: State Sales Tax Deduction vs Income Tax: https://finhelp.io/glossary/state-sales-tax-deduction-vs-income-tax-which-to-choose/)

  1. Student loan interest
  • What you can deduct: up to $2,500 of interest paid on qualified student loans for the year, subject to adjusted gross income (AGI) phaseouts and other rules. For current phaseout thresholds and qualification rules, see the IRS page on student loan interest deduction.
  • Who is excluded: if someone else (for example, a parent) claims an exemption or paid the loans and you are not legally obligated on the loan, you typically cannot take the deduction.
  • Documentation: Form 1098-E from your loan servicer shows interest paid. Keep it with your tax file and reconcile it to your bank records.
  • Practitioner note: many clients assume they can claim student loan interest when they were actually on an income-driven repayment plan with interest capitalized — the paperwork still matters, but income limits can block the deduction.
  1. Business expenses for gig workers and freelancers
  • Examples: supplies, software subscriptions, marketing costs, mileage, small equipment, professional dues, continuing education tied to the business.
  • What trips people up: misclassifying personal spending as business use or failing to prorate mixed-use costs (e.g., a smartphone used for both personal and business calls).
  • Recordkeeping: keep dated invoices, receipts, and a separate business bank or credit card when possible. For mileage, maintain a contemporaneous log or use an approved mileage-tracking app and note business purpose for trips.
  1. Medical expenses and charitable contributions (timing matters)
  • Medical expenses: only the amount that exceeds a percentage of AGI (thresholds can change) is deductible when you itemize. People often miss qualifying expenses like travel for medical care or certain medically necessary home modifications — but save receipts and provider notes.
  • Charitable contributions: cash and non-cash donations require different documentation. Large gifts or donated property need appraisals or contemporaneous written acknowledgements from charities. Don’t forget smaller deductions like out-of-pocket volunteer expenses (e.g., supplies purchased for a nonprofit).

Documentation checklist — what to keep year-round

  • Receipts for large purchases and inventories of donated items
  • Form 1098-E (student loan interest) and Form 1098 (mortgage interest)
  • Invoices and bank/credit-card records for business expenses
  • A calendar or log for home office use and mileage
  • Canceled checks or bank statements for charitable gifts and medical costs

In practice, I advise clients to scan receipts monthly and keep a simple spreadsheet summarizing totals by category; that reduces last-minute stress and helps spot missed deductions early.

Common mistakes and how to avoid them

  • Claiming employee business expenses on Schedule A when not eligible: after TCJA, most employees cannot claim unreimbursed employee expenses. If your employer operates an accountable reimbursement plan, ask for reimbursements or a written policy that documents business expense coverage.
  • Mixing personal and business use without proration: for items used partly for business (cell phones, internet), calculate and document reasonable business-use percentages.
  • Not reconciling 1099s and W-2s: mismatches between income reports and deductions invite IRS notices. Reconcile business income and expenses before filing.

Who should consider itemizing?

Itemizing makes sense if your total allowable itemized deductions (mortgage interest, charitable gifts, medical expenses above the threshold, SALT up to the cap, casualty losses where allowed, and others) exceed the standard deduction for your filing status. Plugging numbers into tax software or a quick spreadsheet will show whether itemizing gains you savings.

Helpful professional tips

  • Run both routes for sales tax vs income tax deduction if you live in a no-income-tax state or made big purchases.
  • For self-employed taxpayers, pay attention to the Qualified Business Income (QBI) deduction interaction with Schedule C net income — legitimate deductions lower QBI-eligible income and can increase the QBI deduction.
  • If you changed jobs or locations during the year, document dates precisely; eligibility for some deductions depends on timing and exclusive use.

FAQs (short answers)

  • Do employees still get unreimbursed employee expense deductions? Not generally — most of these deductions were suspended for tax years 2018–2025 under the TCJA except for a few specific employee categories. See IRS guidance for current exceptions.

  • Do I need to itemize to claim these deductions? Most of the deductions discussed (sales tax, charitable gifts, medical expenses) require itemizing. Student loan interest is an adjustment to income and does not require itemizing.

  • How long should I keep records? Keep tax records for at least three years; for certain property and business records, retain them longer (up to seven years or more) if you claim depreciation or business losses. Keep vehicle logs while you own the vehicle and for at least three years after the tax year claimed.

Sources and further reading

  • IRS Publication 587, Business Use of Your Home (for home office rules and methods). (irs.gov)
  • IRS Student Loan Interest Deduction page (current limits and rules). (irs.gov)
  • IRS instructions for Schedule A (itemized deductions) — includes information on deducting state and local sales taxes and the SALT cap. (irs.gov)

Additional reading on specific topics is available on FinHelp:

Professional disclaimer

This article is educational and not personalized tax advice. Tax laws and thresholds change; consult a qualified tax professional or the IRS directly for advice about your specific circumstances. In my practice, tailored reviews of client documentation frequently reveal missed deductions or safe ways to document claims — consider a brief tax review if you believe you’ve missed deductions in prior years.

If you’d like, I can create a one-page checklist you can use when gathering documents for next year’s return or a short worksheet to decide whether to itemize.