Taxes are about as welcome as a root canal. But if you itemize tax deductions—rather than take the standard deduction—there are some surprisingly pain-free opportunities to keep more of your hard-earned dollars away from the IRS.
These tax hacks go well beyond the usual suspects, like mortgage interest or charitable donations. I’m talking about hidden gems that could make a real difference on your tax filing: summer camp expenses, energy efficient home improvements, and classes on the Potterverse.
A word of caution: taxes are complex, and IRS rules change faster than fashion trends. What saves you money this year might not apply the next, and many credits phase out as your income rises. Furthermore, these tips are not for Americans who stick with the standard deduction on their 2024 tax filing—$14,600 for single filers and married people filing separately, $21,900 for heads of household, and $29,200 for joint filers.
As always, before implementing any strategy, you should consult with a qualified tax professional. They'll ensure you're not just saving money, but staying on the right side of the IRS.
Summer camp expenses are deductible
Think summer camp is all about campfires and kayaking? Think again. It's also a potential tax goldmine. The American Camp Association reports the average day camp costs about $87 per day. That's not pocket change, but here's the kicker: Some of those expenses might qualify for the Child and Dependent Care Credit.
This credit could slash up to 35% from qualifying expenses, maxing out at $3,000 for one child or $6,000 for two or more. The catch? It must be a day camp (sorry, no overnight ghost stories), and it needs to allow you to work or find employment. So while your kids perfect their archery skills, you're hitting a tax bullseye.
Home improvements can help you go green and save green
Going green isn't just good for the planet, it can be a boon for your tax bill. The Residential Clean Energy Credit lets you claim up to 30% of the cost for installing solar panels, wind turbines, or geothermal heat pumps. And unlike your electricity bill, there's no upper limit on this credit.
Alison Flores, Manager at The Tax Institute at H&R Block, told Fortune in an interview that not only home improvements that save on utilities count for the Clean Energy Credit but something that saves at the gas pump could count, too. “If you install an electric vehicle charger in your home, you may be eligible for a tax credit,” she says.
This credit is something to watch—the Trump Administration has issued an executive order pausing provision of funds under the Inflation Reduction Act which established the credit. But the order applies to spending, not credits, so for now the Residential Clean Energy Credit appears safe from the chopping block.
Lifetime learning: It pays to be curious
Education isn't just for the young, and neither are education tax credits. The Lifetime Learning Credit lets you claim 20% of the first $10,000 paid for tuition and fees on job-skill related, undergraduate or graduate classes, up to $2,000.
The best part? There's no degree-earning requirement and you can take it every single year you qualify. So, whether you're learning Python code or analyzing Nagini, Uncle Sam might chip in. This is another credit you might want to keep an eye on, as the Trump administration also has its eyes on the Lifetime Learning Credit as a possible future cut.
The home office deduction isn’t just about the house
If you work from home, you probably know about the home office deduction. But did you know that electronics that you use for business are deductible as well? Think about Alexa or even your Airpods. If they are necessary for you to do business, they could qualify as part of your home office expenses.
The words to think about here are “ordinary and necessary.” If you regularly take calls in your home office, noise-cancelling headphones absolutely make sense. And if you buy home office supplies by telling Alexa to organize your shopping list, it could qualify as well.
The tax takeaway
Remember, tax laws are as predictable as a board with a six-year-old—rules can change without warning. Always check with a tax pro before trying these strategies. But with some savvy planning, you might find that saving on taxes isn't as painful as a root canal after all.
Who knows? You might even start looking forward to tax season (okay, let's not get carried away).
