What deductions do most people miss on their tax returns?
David TalleyUpdated December 18, 2025
Quick Answer
The most commonly missed deductions include state sales tax (especially in Tennessee where there's no income tax), out-of-pocket medical expenses exceeding 7.5% of income, educator expenses, student loan interest, and home office deductions for self-employed individuals. Many people also forget to deduct job search expenses and moving costs for work.
I've reviewed thousands of tax returns, and there's a pattern to what gets left on the table.
The Tennessee-specific one:
State sales tax deduction. Since Tennessee has no income tax, you can deduct sales tax instead. For a family making $80,000, that's often $1,500-2,000 in deductions people just... forget. The IRS has tables, but if you made big purchases—a car, appliances, home renovations—you can add those on top.
Medical expenses:
The 7.5% threshold trips people up. If your income is $60,000, you need over $4,500 in medical expenses before they count. But here's what people miss: it's not just doctor visits. It's mileage to appointments, prescription costs, dental work, vision, even some home modifications for medical reasons.
Self-employed home office:
The simplified method gives you $5 per square foot, up to 300 square feet. That's $1,500 without tracking a single utility bill. Most self-employed folks I work with either don't take this or vastly underestimate their eligible space.
The quiet ones:
- Educator expenses (teachers get $300 off the top)
- Student loan interest (up to $2,500, even if you don't itemize)
- Casualty and theft losses in federally declared disaster areas
- Gambling losses (if you have gambling winnings to offset)
What you're probably not missing:
The child tax credit, mortgage interest, charitable donations—the obvious stuff. Most tax software catches these. It's the situational deductions that require someone who knows your full picture.
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