Commonly missed tax breaks tax pros should check

Even seasoned tax professionals can overlook valuable tax breaks, especially during a busy filing season when time pressure increases. Missing credits, deductions and adjustments are among the most common and preventable sources of lost client savings. Overlooking these items can mean higher tax bills for clients, more amended returns and unnecessary follow-up work. Understanding where taxpayers commonly miss opportunities can help sharpen your review process and deliver greater value.

A good place to start is a list of widely overlooked deductions and credits beyond the basics. While many taxpayers claim the standard deduction, several less obvious deductions can add up to real savings if the client’s situation supports them. A review of commonly missed breaks reveals a variety of opportunities that often get overlooked. 

Some commonly missed tax breaks

Student loan interest is often overlooked or misunderstood. Even if a client’s income limits eligibility, careful calculation can reveal moments when part or all of the interest qualifies for the deduction. 

Education credits, such as the American opportunity credit and the lifetime learning credit, may also be available and are often missed on returns where qualified education expenses exist. 

Moving expenses can be deductible for certain taxpayers, including military members on active duty who move due to a military order and a permanent change of station (PCS). Even though moving expense deductions were largely eliminated for most workers by prior law changes, service members who meet these requirements can still benefit.

Basis adjustments can reduce taxable gain. Tax professionals should review basis adjustments for reinvested dividends and properly document casualty and theft losses on income-producing property. These adjustments can reduce capital gains tax when assets are sold. 

Don’t forget about itemized deductions

Itemized deductions are still worth evaluating even when a client expects to take the standard deduction. For some clients, itemizing yields a greater total deduction, which could lead to tax savings. Carefully reviewing itemized categories every year, rather than assuming the standard deduction is best, can uncover savings that go unnoticed: 

• Charitable contributions are a frequent miss, especially small out-of-pocket expenses tied to volunteer work such as mileage, parking and supplies. Many clients think only cash donations matter, but noncash contributions also count when properly documented. Keep receipts and acknowledgments on file to support these claims.
• Medical and dental expenses remain a deduction that many taxpayers miss because they do not exceed the threshold or taxpayers stop tracking them too soon. Clients should track medical costs, including out-of-pocket expenses, prescription costs and mileage to medical appointments. These can add up and exceed the 7.5% of adjusted gross income threshold, making them deductible.
• State and local taxes are another common miss. Taxpayers can choose to deduct either state income or sales tax paid, but not both. In states without an income tax, the sales tax deduction can be particularly valuable, especially for large purchases.

Why this matters for your practice

Missing deductions and credits does more than increase a client’s tax bill. It can lead to amended returns and extra client communication in your work. A consistent review process that targets commonly overlooked tax breaks helps ensure correct tax liability and strengthens long-term client relationships. 

Ready for more?

If you want to sharpen your review process and learn where tax pros most often miss valuable deductions and credits, join NATP’s upcoming webinar, Tax Breaks You May Be Overlooking, scheduled for March 4. This session will walk through real-world examples, highlight common trouble spots and help you build a repeatable approach to catching missed tax savings before the return is filed.