5. Charitable donations and volunteer expenses
If you itemize deductions, you can also deduct contributions made to qualified charitable organizations. This includes cash donations, as well as non-cash contributions, such as used clothing and household items.
Don't forget to track the miles you drive while volunteering. Your deduction for charitable donations can include 14 cents per mile for such work.
6. IRA contributions
Many retirees continue working part-time in retirement, either because they enjoy working or want to have enough money to enjoy retirement long into the future.
Working people age 50 or older can contribute up to $7,000 to an IRA for 2020. Previously, contributions to traditional IRAs weren't allowed after age 70, but the SECURE Act8 removed those age restrictions. The Act also increased the age at which individuals must start taking required minimum distributions from 70 to 72.
This means a working person over the age of 72 could potentially be contributing to an IRA while simultaneously required to take out minimum distributions in the same year.
7. Investment expenses
Before the Tax Cuts and Jobs Act of 2017 (TCJA), taxpayers who itemized on Schedule A could deduct various investment expenses - such as investment management fees and financial planning fees - as miscellaneous itemized deductions. Miscellaneous itemized deductions also included things like unreimbursed job expenses and tax preparation fees.
The TCJA eliminated most miscellaneous itemized deductions, but you can still deduct investment interest expense on Line 9 of Schedule A. The investment interest expense10 is interest paid on money borrowed to purchase taxable investments, and it includes margin loans for buying stocks in your brokerage account. The amount you can deduct is capped at your net taxable investment income for the year.
Talk with a tax professional to ensure you're getting the most out of your available deductions.