5 Tax Deductions W-2 Employees Almost Always Miss

Most W-2 employees assume their tax return is straightforward — pay your withholding, claim the standard deduction, hope for a small refund. But even simple-looking returns leave money on the table when filers don’t know what to ask for. Here are 5 deductions and credits that W-2 earners commonly miss.

1. Home Office Deduction (Yes, Even as a W-2)

Strict eligibility rules apply (the space must be used regularly and exclusively for work, and your employer must require remote work), but if you qualify, you can deduct a portion of your rent or mortgage interest, utilities, and depreciation. The simplified method gives $5 per square foot up to 300 sq ft — that’s $1,500 in deductions for a small dedicated home office.

2. Student Loan Interest Deduction

Up to $2,500 of student loan interest is deductible — and unlike most deductions, you can claim it even if you take the standard deduction. Income limits phase it out (~$95K single, $200K joint), but many filers forget to claim it because the loan servicer’s 1098-E form sometimes goes overlooked.

3. Educator Expenses

K-12 teachers can deduct up to $300 of out-of-pocket classroom supplies (or $600 if both spouses are eligible educators). This is an “above the line” deduction, meaning you don’t have to itemize.

4. Job Search and Relocation Costs

While the federal deduction for unreimbursed job-search costs is currently suspended, many states still allow it on state returns. And active-duty military members can still deduct unreimbursed moving expenses federally. Worth a closer look if you changed jobs or moved this year.

5. Investment-Related Deductions

Investment management fees and certain advisory expenses paid from a taxable account may be deductible at the state level. Plus, if you had losses on stocks or crypto, you can offset capital gains and deduct up to $3,000 of net losses against ordinary income — and carry the rest forward indefinitely.

The Bottom Line

Even “simple” W-2 returns benefit from a CPA who actively looks for these deductions instead of just typing in the numbers. If you’re not sure whether you’ve been claiming everything you’re entitled to — or if you’ve had a major life change recently — it’s worth a 30-minute conversation.