Imagine paying the IRS hundreds or even thousands of dollars more than what you owe. Now imagine doing that every single year when you could have been saving those funds.
Many taxpayers overpay their tax bills because they aren’t aware of what deductions they qualify for. Tax professionals say this pattern is common and often preventable.
Here are a few deductions you may be surprised that you qualify for, according to experts.
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The HSA Triple Tax Advantage
Health savings accounts (HSA) offer three separate tax benefits, yet many eligible taxpayers never open one or use it only for short-term expenses.
“Health savings accounts are a great way to keep money permanently tax-free,” said Wendy Christiansen, certified public accountant (CPA) and tax supervisor at Taxes for Expats. “Taxpayers can deduct contributions, growth is tax-free and distributions are also tax-free as long as spent on qualifying medical expenses.”
To qualify, you must have a health plan that requires you to pay more of your medical bills yourself before insurance starts helping. If you qualify but aren’t putting money into an HSA, you’re giving up a lower tax bill when you file and tax-free savings for future medical costs.
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Self-Employed Health Insurance Premiums
Freelancers, contractors and side-gig workers pay for their own coverage without realizing their tax advantages.
Self-employed individuals can deduct 100% of health insurance premiums paid for themselves and their families, no itemizing required, Christiansen explained. The deduction lowers your income before taxes are calculated, even if you take the standard deduction.
Because this deduction happens above the line, it often goes unclaimed. Missing it year after year can mean thousands of dollars in unnecessary taxes.
401(k) Contributions
Employees often don’t realize how much contributing to their 401(k) can reduce their taxable income. In a YouTube video, Sherman Standberry, CPA and CEO of My CPA Coach, shared how you can do this.
“If you move a portion of your earned income into a traditional 401(k) plan, that portion of your income would not be subject to tax,” he said.
For 2025, employees can contribute up to $23,500 to a traditional 401(k) or $31,000 for those 50 and older, according to the IRS website. The IRS also noted that elective deferrals aren’t included in your Box 1 wages on your W-2. In other words, the tax reduction is already built in through payroll without any extra steps at filing.
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This article originally appeared on GOBankingRates.com: I’m a CPA: 3 Tax Deductions My Clients Are Often Surprised They Qualify For
