10 Tax Write-Offs You Shouldn't Overlook

If you want to save money at tax time, you'll want to take advantage of as many tax deductions as possible.

While the term write-off often refers to a deduction, many taxpayers use it to describe a tax credit as well. "A deduction is a deduction from (taxable) income, and a credit is a deduction from tax (owed)," explains Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting, a provider of software and information services for tax, accounting and audit workers. While a credit can result in more substantial savings, both can reduce your tax bill.

[Read: Tax Deductions That Disappeared This Year.]

From state taxes to child care expenses, there are plenty of ways to reduce your federal tax obligation. Here are 10 tax write-offs you shouldn't overlook:

-- State income and sales tax.

-- Mortgage points and property tax.

-- Value-based car registration fees.

-- Medical expenses.

-- Noncash charitable giving.

-- Traditional IRA and HSA contributions.

-- College tuition and student loan interest.

-- Self-employment income.

-- Child care.

-- Earned Income Tax Credit.

Read on to learn more about the 10 credits and deductions you don't want to miss out on.

State Income or Sales Tax

Taxpayers who itemize deductions can choose to deduct either their state income or state sales tax payments. While state income tax may provide the bigger deduction for many people, a sales tax deduction might make more sense for those who made a major purchase, such as a vehicle or a boat last year.

In the past, taxpayers could take an unlimited itemized deduction for their state income or sales tax. However, for the 2018 tax year, under the new rules of the Tax Cuts and Jobs Act of 2017, the deduction for sales, income and property tax deductions is capped at $10,000. "That's probably less valuable now to a lot of people," Luscombe says.

Mortgage Points and Property Taxes

Property taxes are a major deduction for many homeowners, though this tax break is subject to the $10,000 cap on deductions for state income, sales and property taxes. Mortgage points paid as part of closing costs on a home sale can also be deducted.

Homeowners who don't think they will hit the $10,000 cap can increase their deduction by consolidating their tax payments in a single year, says Paul T. Joseph, an attorney and CPA with Joseph & Joseph Tax & Payroll in Williamston, Michigan. This works particularly well in states where residents are assessed winter and summer tax bills. While a winter bill may not be due until January or February, it can be deducted for the previous tax year if paid in December. This strategy means a homeowner might pay three bills in one calendar year and make a single summer payment the following year.

Accelerating tax payments is particularly beneficial now that the standard deduction has been nearly doubled to $24,000 for married couples filing jointly. As a result, many people won't be able to itemize unless they concentrate their deductible spending into a single year. "You want to pay (bills) so they are all part of the same pile (in the same year)," Joseph says.

Value-Based Car Registration Fees

States have a variety of methods to assess registration renewal fees for vehicles. Some assess flat fees, while others calculate the amount based upon the weight of a vehicle. These fees are not deductible. However, other states, such as Michigan and California, assess a fee based on the value of a car. In those states, taxpayers can include the amount paid in their itemized deductions so long as the fee is assessed on an annual basis.

Medical Expenses

For the 2018 tax year, taxpayers can deduct medical expenses that exceeded 7.5 percent of their adjusted gross income. In addition to out-of-pocket costs, the IRS allows people to deduct mileage or other travel expenses associated with medical visits.

What's more, they can deduct home improvements completed for a medical reason, says Laura Plotner, tax managing director for financial firm CBIZ MHM in Tampa Bay, Florida. It's a commonly overlooked option for significant tax savings. Examples of medical home renovations include installing a wheelchair ramp, lowering cabinets and installing support bars. "Those types of things would all be deductible," Plotner says.

However, only costs exceeding 7.5 percent of a person's adjusted gross income is deductible and any increase in the value of the home that occurs because of the renovation must be subtracted from the deductible amount. In the 2019 tax year, the threshold will increase and only expenses in excess of 10 percent of a person's adjusted gross income will qualify for a deduction.

Noncash Charitable Giving

The deduction for cash gifts to charities is well-known, but not all taxpayers are aware they can deduct other charitable gifts as well. Donations of goods made to a local thrift store can be deductible, as can expenses associated with volunteer work.

"People don't claim their charitable mileage," Joseph says, and that's a mistake. Taxpayers can deduct 14 cents per mile driven to and from volunteer activities for nonprofit organizations. What's more, they can deduct any parking expenses or tolls incurred as a direct result of volunteerism.

However, not everything related to volunteer work is deductible. You can't deduct for your time or any personal expenses. For instance, if you stopped by a restaurant on the way to a volunteer opportunity, you can't deduct the cost of lunch.

See: [15 Tax Questions -- Answered.]

Qualified Business Income

The creation of the qualified business income deduction is one of the most significant changes made by the Tax Cuts and Jobs Act of 2017. It allows certain self-employed individuals who have pass-through businesses such as sole proprietorships, partnerships, S Corporations and limited liability corporations to deduct 20 percent of their business income from their personal taxes. The deduction is only available to individual taxpayers who have incomes below $157,000 or $315,000 for married couples filing jointly.

Still, there are also some limitations on which occupations are eligible for the deduction. For instance, some service-based professionals such as physicians and attorneys are excluded. "Some people might look at it and decide it's too complicated to figure out," Luscombe says. However, a 20 percent deduction of business income is substantial, and it may be worth seeking out assistance from a tax professional to take advantage of the write-off.

Traditional IRA and HSA Contributions

IRA and health savings account contributions are unique when it comes to taxable deductions. While taxpayers must have paid for other expenses in 2018 to claim a deduction, they can make a deposit in a traditional IRA or an HSA as late as April 15, 2019, and still deduct it on their tax forms.

For the 2018 tax year, workers younger than age 50 can contribute up to $5,500 to an IRA, while those age 50 or older can make a $6,500 contribution to a traditional IRA. HSAs can be opened by those with a qualified high-deductible health insurance plan. The 2018 contribution limits to these accounts are $3,450 for those with single coverage and $6,900 for those with a family health plan.

College Tuition and Student Loan Interest

The government provides several tax deductions and credits intended to offset the cost of college. These include the American Opportunity Credit, the Lifetime Learning Credit and a deduction for student loan interest.

Education tax credits and deductions can be claimed by a child so long as he or she has earned income and is not listed as a dependent on a parent's tax form. Only the parent or the child can claim an education deduction or credit. For affluent households, where the total income makes families ineligible for education credits, it could be beneficial to stop claiming children in college so they can apply for a deduction or credit themselves.

Earned Income Tax Credit

The earned income tax credit is a refundable credit which means families can receive a check from the government even if they haven't paid any taxes. "A lot of people miss that opportunity," Plotner says.

To be eligible for the credit, people must have at least one dollar of earned income and at least one qualifying child. They also must not exceed certain income limits that vary depending on a person's filing status and number of children. To qualify, the maximum earned and adjusted gross income must be less than $54,884 for a married couple filing jointly with three or more qualifying children. The credit amount also varies depending on a person's income and number of children, and the maximum credit for the 2018 tax year is $6,431.

Child Care

Parents who work may be eligible for a child and dependent care tax credit, and that's not the only day care expense they may qualify for. Day camps may also be claimed as a qualified expense.

For child care and any other tax write-offs, it's essential to have proper documentation to justify the deduction or credit. Also, while it affects a relatively small number of people, high-income families should be wary of inadvertently triggering the alternative minimum tax as a result of their write-offs. If you've been hit with this tax, it may be wise to consult with a financial professional to determine the cause.

[See: 10 Smart Ways to Spend Your Tax Refund.]

However, for most people, more tax write-offs means a smaller tax bill. Check with your accountant or review your records to ensure you haven't overlooked these deductions and credits or other money-saving tax incentives.