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Did You Pay Too Much Tax in Prior Years?
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Article Highlights Overlooking Tax Benefits Last Three Years Can Be Amended Sampling of Commonly Overlooked Benefits Professional Review Have you been preparing your own returns? If not, did you have someone prepare it who didn’t take the time to query you about possible tax deductions, credits or filing status options? If you answered either question yes, you could have missed out on a number of tax benefits that could have saved you big bucks in taxes. If something was overlooked, there is still time to get a refund for 2015, 2016 or 2017 (or even 2014, for some state returns). So if you know you missed something, or even if you just want a professional to look over your past returns to see if something was overlooked, give this office a call. Here is a list of some (but not all) frequently overlooked tax benefits that may apply to you. Some of these were extended to 2017 in a special bill passed by Congress in the middle of February 2018, so if you filed your 2017 return before that date or used a preparer who does not keep up with changes, there’s a chance one or more items may apply to you. Please note that the items listed below apply to years 2015 through 2017. Above-the-line Tuition Deduction – Allows a deduction of up to $4,000 for higher education tuition without itemizing deductions. American Opportunity Credit – Provides a tax credit of up to $2,500 for the first four years of your or your qualified child’s higher education tuition and qualified expenses, even if paid by someone other than you. Lifetime Learning Credit – Offers a credit of up to $2,000 for tuition and qualified higher education expenses for family members. Student Loan Interest – A deduction of up to $2,500 for student loan interest paid, which is deductible without itemizing deductions. Mortgage Insurance Premiums – Premiums on contracts issued after 2006 can generally be deducted as home mortgage interest when itemizing deductions. Home Energy Efficient Improvement – A tax credit of up to $500 for making certain home energy improvements. Electric Vehicle Credit – A credit of up to $7,500 for purchase of plug-in electric vehicles, if the manufacturer has not exceeded the 250,000-unit sales limit for qualifying for the credit. Excess FICA – If an individual had more than one employer during the year and the FICA withholding for the year exceeded the overall FICA withholding cap, the excess is refundable on the 1040. Consumer Interest – Generally, consumer interest is not deductible. But if a loan is used to purchase a vehicle or other property used both for business and personally, the portion of the interest allocable to business is deductible as business interest (does not apply to employee business expenses). Surviving Spouse Filing Status – For the two years after the death of a spouse, a surviving spouse with a dependent child can continue to benefit from the married filing joint tax rates. Head of Household Filing Status – A married individual, separated and living apart from their spouse for the last 6 months of the year, can use the more beneficial head of household filing status, which is normally only available for unmarried individuals. Saver’s Credit – For lower-income taxpayers making retirement plan or IRA contributions, the saver’s credit provides a credit of 10, 20 or even 50 percent of the taxpayer’s contribution to a retirement plan. The overall cap on this credit is $1,000. Medicare Premiums – Frequently overlooked either as a medical itemized deduction or for the self-employed medical insurance deduction are the Medicare premiums withheld from Social Security benefits. Penalty Abatement – Professional tax preparers use a number of tax provisions to have various tax penalties abated, including the late filing penalty, ACA penalty for not having health insurance, penalty for not withdrawing the required minimum amount from a pension plan or a traditional IRA, early retirement plan or IRA withdrawal penalty, negligence penalty and more. Overlooked Points – Points paid for the purchase of a home are generally deductible as part of the itemized deduction for mortgage interest. State Tax Refunds – The amount shown on Form 1099-G, the state tax refund a taxpayer received from their prior year’s return, may not be federally taxable or may be only partly taxable. Examples include when a taxpayer claimed the standard deduction on their prior year’s federal return or if their prior year’s federal tax included the alternative minimum tax.
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Tax and Financial Insights
by NR CPAs & Business Advisors
2026 IRS Mileage Rates: Key Updates and Insights
The IRS has rolled out the inflation-adjusted mileage rates for 2026, offering taxpayers an efficient way to claim deductions for vehicle-related expenses incurred for business, charity, medical, or moving purposes. These adjustments reflect the continued economic shifts impacting car operation costs.
Effective January 1, 2026, the new standard mileage rates are established as follows:
- Business Travel: Increased to 72.5 cents per mile, inclusive of a 35-cent-per-mile depreciation allocation. This marks a rise from the 70 cents per mile rate set for 2025
- Medical/Moving Purposes: Reduced slightly to 20.5 cents per mile, down from 21 cents in the previous year, reflecting the variable cost considerations.
- Charitable Contributions: Consistent at 14 cents per mile, a fixed rate unchanged for over a quarter-century.
As is typical, the business mileage rate considers the integral fixed and variable costs of automobile operation. Meanwhile, the medical and moving rates remain contingent on variable expenses as determined by the IRS study.
It is critical to note that the One Big Beautiful Bill Act (OBBBA) held firm on disallowing moving expense deductions except for specific cases within the Armed Forces and intelligence community, marking a substantial shift since 2017.
When engaging in charitable work, taxpayers might opt for a direct expense deduction over the per-mile method, covering gas and oil costs. However, comprehensive upkeep and insurance costs are non-deductible expenses.
Business Vehicle Use Considerations: Taxpayers can alternatively compute vehicle expenses using actual costs, which might benefit from shifting depreciation rules, particularly through bonuses and first-year advantages. Keep in mind, however, reverting from actual cost calculations to standard rates in subsequent years is restricted, particularly per vehicle protocol and when exceeding four vehicles in concurrent use.
Additionally, parking, tolls, and property taxes attributable to business can be deducted independently of the general rate, an often-overlooked advantage by many business owners.
Tax Strategies for Employers and Employees: Reimbursements based on the standard mileage framework, providing the right documentation is in place, remain tax-free for employees. Meanwhile, the elimination and continued prohibition of unreimbursed employee deductions continue, with particular exceptions offered to qualified personnel across specific occupations.
Opportunities for Self-employed Individuals: Entrepreneurs remain eligible for deductions on business-related vehicle use via Schedule C, with potential to account for business-use interest on auto loans.
Heavy SUVs and Deduction Advantages: Heavier vehicles exceeding 6,000 pounds but under 14,000 pounds open opportunities for substantial tax deductions through Section 179 and bonus depreciation avenues. The lifecycle of such a vehicle bears implications on recapturing initially claimed deductions, urging cautious tax planning.
For professional guidance on optimizing your vehicle-related tax deductions and understanding their implications on tax strategies, contact our office in Coral Gables, Florida, where expert advice and strategic insights are just a call away.
Educator's Deduction Reform: Key Changes Under OBBBA
The One Big Beautiful Bill Act (OBBBA) introduces significant enhancements for educators' tax deductions starting in 2026, offering both strategic opportunities and planning considerations for educators who qualify. With the reinstated itemized deduction for qualified unreimbursed expenses, educators have a broader spectrum of financial relief. This is complemented by the retention of the $350 above-the-line deduction, allowing educators to maximize their tax benefits by selectively allocating expenses between these avenues.
Understanding the nuances of these changes is crucial for educators and financial advisors alike. The dual-option deduction strategy can potentially enhance tax efficiency, thereby aligning with broader financial planning goals.
At NR CPAs & Business Advisors, based in Coral Gables, Florida, our expertise in tax preparation and planning provides invaluable support to educators navigating these changes. Our comprehensive approach, combined with personalized advice from our experienced team, ensures compliance and optimization in line with the latest tax legislations.
Given these updates, it is imperative to engage with seasoned professionals to fully leverage your deduction strategies. Contact us today to streamline your tax planning under OBBBA's new guidelines and maximize your deductions for upcoming tax years.
