Many taxpayers pay more than they owe simply because they miss deductions. From reinvested dividends to Medicare premiums, small oversights can add up. Knowing what to look for may help you keep more of your hard-earned money.
No one in Santa Ana or anywhere in Orange County wants to pay the IRS more than necessary. Yet every year, many taxpayers do just that because they overlook legitimate deductions.
While most people remember mortgage interest or charitable cash donations, several lesser-known deductions often go unclaimed.
Here are five commonly overlooked tax deductions you should know about.
1️⃣ Reinvested Dividends
If you own mutual funds outside of retirement accounts, dividends and capital gains distributions are typically taxable—even if you reinvest them.
Here’s where mistakes happen:
When you sell your mutual fund, if you don’t include reinvested dividends in your cost basis, you could end up paying tax twice on the same money.
For example, if you’ve owned a fund for years and consistently reinvested distributions, failing to track that basis adjustment may increase your taxable gain when you sell.
Keeping accurate records—or working with a financial professional—can prevent this costly oversight.
2️⃣ Charitable Donations Beyond Cash
Many Santa Ana residents donate generously—but only track cash gifts.
Potential deductible contributions may include:
- Donated household goods
- Clothing
- Furniture
- Mileage driven for charitable activities
If your total donation to a single organization exceeds $250, you’ll need proper documentation.
Small donations throughout the year can add up significantly.
3️⃣ State and Local Taxes (SALT Deduction)
If you owed state income tax when filing last year and paid it during the current tax year, you may be able to deduct it.
Keep in mind:
There is a $10,000 cap on the combined state and local tax (SALT) deduction.
For homeowners in California, where property taxes and state income taxes can be higher, this deduction is especially relevant.
4️⃣ Medicare Premiums and Medical Expenses
Medical expenses are deductible if they exceed 7.5% of your adjusted gross income (AGI).
Qualifying expenses may include:
- Medicare Part B premiums
- Medicare Part D premiums
- Supplemental policies
- Copayments
- Deductibles
- Certain dental and vision expenses
For retirees in Orange County, this is often overlooked—especially when premiums are automatically deducted from Social Security benefits.
5️⃣ Income in Respect of a Decedent (IRD)
This one is less commonly discussed but very important for families managing estates.
Income in Respect of a Decedent (IRD) refers to income the deceased person was entitled to receive but had not yet collected at the time of death.
Examples include:
- Unpaid wages or bonuses
- Retirement account distributions
- Uncollected interest or rent
- Deferred compensation
The IRS allows a deduction to help prevent double taxation when estate taxes were paid on those assets.
If you’re a beneficiary, consulting a tax professional is strongly recommended.
Why This Matters for Santa Ana Families
Tax planning and financial protection go hand in hand. Whether you’re building wealth, managing retirement income, or handling an estate, understanding deductions can help preserve what you’ve worked hard to earn.
Even small missed deductions can add up over time.
How Neighborhood Insurance Agency Supports Financial Awareness
While we are not tax advisors, Neighborhood Insurance Agency in Santa Ana, California, believes that financial education is part of protecting your future.
Since 1989, we’ve helped families, business owners, and retirees protect their homes, businesses, and lives with thoughtful coverage planning—because financial clarity is the key to your peace of mind.
If you’re reviewing your financial picture this year:
👉 Get a quote or talk to us today.
Santa Ana, CA 92705
Reference
Internal Revenue Service. (2023). Publication 17: Your federal income tax. Retrieved from
https://www.irs.gov/forms-pubs/about-publication-17
Internal Revenue Service. (2023). Medical and dental expenses. Retrieved from
https://www.irs.gov/taxtopics/tc502
Internal Revenue Service. (2023). Publication 559: Survivors, executors, and administrators. Retrieved from
https://www.irs.gov/forms-pubs/about-publication-559
