What Are the Most Overlooked Tax Deductions That Could Save You Thousands?

Introduction

Many taxpayers miss out on valuable tax deductions that can significantly lower their taxable
income and increase their refund. Under various sections of the Internal Revenue Code (IRC),
deductions for education, healthcare, homeownership, and self-employment can help reduce taxes
if claimed correctly.

This guide covers the most overlooked tax deductions in 2025, helping you maximize your savings
and avoid leaving money on the table.

1. State Sales Tax Deduction (IRC § 164)

•  If you live in a state with no income tax (e.g., FL, TX, NV), you can deduct state sales tax
  instead of state income tax.
•  Use the IRS Sales Tax Deduction Calculator or keep receipts for major purchases.

2. Student Loan Interest Deduction (IRC § 221)

•  Deduct up to $2,500 in student loan interest paid in 2025.
•  Available even if someone else paid the loan on your behalf (as long as you are legally
  responsible for the loan).

3. Home Office Deduction (IRC § 280A)

•  If you are self-employed and use part of your home exclusively for business, you may
  qualify.
•  Choose the simplified method ($5 per sq. ft., up to 300 sq. ft.) or deduct actual home
  expenses.

4. Medical Mileage Deduction (IRC § 213)

•  If you drove to doctor’s appointments, pharmacies, or therapy in 2025, you can deduct
  $0.22 per mile.
•  Keep a mileage log and track medical-related transportation costs.

5. Job Search Expenses (Limited Cases, IRC § 162)

•  While job search expenses are not deductible for W-2 employees, they may be deductible if
  related to self-employment.
•  Includes resume preparation, travel for interviews, and employment agency fees.

6. Mortgage Points Deduction (IRC § 163)

•  If you bought a home in 2025, mortgage discount points paid at closing may be deductible.
• Points must be paid upfront and relate to a primary residence.

7. Educator Expenses (IRC § 62(a)(2)(D))

•  Teachers and eligible educators can deduct up to $300 for classroom supplies, books, and
  technology.
•  Married educators filing jointly can each deduct $300 ($600 total).

8. Gambling Losses Deduction (IRC § 165(d))

•  You can deduct gambling losses up to the amount of reported gambling winnings.
•  Must keep detailed records of bets, wins, and losses.

9. State Tax Refund Deduction (IRC § 111)

•  If you paid state income tax in a prior year and received a refund, you may be able to
  deduct state taxes paid if you itemized deductions.

10. Self-Employment Retirement Contributions (IRC § 404 & § 219)

•  If you contribute to a SEP IRA, Solo 401(k), or SIMPLE IRA, those contributions are fully
  deductible.
•  The 2025 contribution limit for a SEP IRA is $69,000.

How to Claim These Overlooked Deductions

Step 1: Gather Required Documents

•  Form 1098 (Mortgage interest and points)
•  Form 1098-E (Student loan interest)
•  Receipts for sales tax, medical expenses, and job search costs

Step 2: Report on the Correct IRS Forms

•  Schedule A (Form 1040) – If itemizing deductions
•  Schedule C (Form 1040) – For self-employed home office expenses
•  Form 8889 – Health Savings Account (HSA) deductions

Step 3: File Accurately and Keep Records

•  Retain receipts and tax records for at least 3 years in case of an audit.

IRS Forms & Compliance Checklist

•  Form 1040 – Report deductions
• Schedule A (Form 1040) – Itemized deductions
•  Form 8889 – HSA contributions
•  Form 1098 – Mortgage and student loan interest

Conclusion

Many taxpayers overlook key tax deductions that can reduce their taxable income and increase
refunds. Whether you’re a homeowner, teacher, freelancer, or retiree, understanding these
deductions ensures you maximize your tax savings.

For expert tax planning, schedule a consultation with Anshul Goyal, CPA EA FCA, a licensed tax professional and IRS representative.

Frequently Asked Questions (FAQs)

1. Can I claim sales tax and state income tax deductions?
No, you must choose either state income tax or sales tax.

2. Are moving expenses deductible in 2025?
Only for active-duty military members under IRC § 217.

3. Can I deduct student loan interest if my parents paid the loan?
Yes, if you are legally responsible for the loan.

4. Is mortgage interest always deductible?
Only if the loan is for a primary or secondary home and within IRS limits.

5. Can I deduct gambling losses?
Yes, up to the amount of gambling winnings, if you itemize deductions.

About Our CPA

Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant and an IRS Enrolled Agent (EA).
He specializes in maximizing tax deductions, IRS compliance, and tax-saving strategies.

Schedule a consultation today with Anshul Goyal, CPA, to ensure you claim every deduction
available.