When navigating a complex financial portfolio, missing a deduction can mean thousands left on the table. High-income earners, investors, and business owners often have access to strategic tax write-offs, but only if they know where to look.
At Tax Advisors of Cary, we help top earners uncover overlooked deductions that reduce taxable income without raising audit risk. Here are a few that often go unclaimed.
Home Office Deduction
Many people are unaware that if they use a dedicated room or space in their home exclusively for business, they may qualify for the home office deduction. This applies even if your business isn’t full-time or your home is primarily used for personal living. The key is exclusive and regular use for business purposes. This space can be a room, or even a clearly defined portion of a room. It’s essential to keep records of your business use, and to calculate the square footage of the area used for business compared to the total square footage of your home. This deduction can help offset business expenses related to your home. Please note that for employees, this deduction is currently suspended through 2025 by the Tax Cuts and Jobs Act, but it remains available for qualifying self-employed individuals and independent contractors.
Investment Advisory Fees
While some advisory fees are no longer deductible under recent tax law changes (specifically, the Tax Cuts and Jobs Act of 2017 suspended miscellaneous itemized deductions, including investment advisory fees, through at least 2025), strategic structuring and business entities may allow partial deductions in specific cases. It’s important to consult with a tax advisor to understand the nuances of these changes. For example, trusts and estates may still be able to deduct these fees under certain conditions. Depending on how your investments are structured and whether they are related to a business entity, certain fees may still be deductible. Detailed record-keeping and professional guidance are crucial in this area to ensure compliance and maximize potential deductions.
Charitable Giving of Non-Cash Assets
Donating appreciated stocks, real estate, or collectibles can yield larger deductions than cash while avoiding capital gains taxes. When you donate these assets, you can deduct their fair market value at the time of the donation. This not only helps the charity but also provides a significant tax benefit for you. It’s essential to get a qualified appraisal for assets valued over a certain amount (generally over $5,000 for most non-cash property) and to follow IRS guidelines for charitable contributions (e.g., filing Form 8283 for noncash contributions over $500). Proper documentation is vital to support these deductions.
Travel Expenses Related to Passive Income
If you own rental property or a limited partnership, travel to inspect your investment or attend meetings may be partially deductible. This includes transportation, lodging, and meals directly related to your investment activities. It’s crucial to document the purpose of your travel, keep receipts, and ensure the travel is primarily for business purposes. Personal travel combined with business requires careful allocation of expenses to claim only the deductible portion. For real estate investors, these can be significant write-offs.
Self-Employed Retirement Contributions
High earners with 1099 income can significantly boost deductions with SEP IRAs or solo 401(k)s, contributing far more than traditional IRAs allow. For 2025, for example, the SEP IRA contribution limit is 25% of eligible employee compensation up to $70,000, and Solo 401(k) limits are also significantly higher than traditional IRA limits. These retirement plans offer greater contribution limits and can substantially reduce your taxable income. Setting up and managing these plans correctly is important. Consulting with a financial advisor can ensure you maximize your contributions and tax benefits within IRS regulations.
The key to all these deductions is meticulous documentation and a customized tax strategy. Don’t rely on generic software—rely on an advisor who understands your full financial picture.
Deduct What You Can!
Effective tax planning goes beyond simply filling out forms; it’s about strategically managing your financial activities to maximize deductions and minimize liabilities. Engaging with a tax professional who understands your specific situation can make a significant difference. By staying informed about tax laws and taking advantage of available deductions, you can retain more of what you earn and achieve greater financial success.
Partner With Us Today!
Let us take the stress out of your taxes and help you keep more of what you earn. After all, your focus should be on your work, not on worrying about tax laws.
At Tax Advisors of Cary, we’re dedicated to helping you navigate complex filings, maximize deductions, and achieve your financial goals with confidence. Connect with us today to schedule an appointment and discover how our expert team can make tax season easier and more rewarding. Let’s work together for your success!
