Clinton Robinson Professional Tax Services' Tax Deductions you cannot take:
IRS tax deductions are the subject of nearly as many urban legends as the dusty Shelby Cobras found in an old garage, the Loch Ness Monster and Microsoft. As much as tax payers would wish they were true, there are some deductions that we just can't take. The problem is that unlike believing the latest conspiracy theory regarding the business practices of Bill Gates, believing misinformation about tax deductions can get you into trouble with the IRS. Here are some IRS tax deductions you really can't take.
IRS Tax Deduction You Can't Take #1 –
Mileage or vehicle related expenses incurred while driving to and from work. If you use the vehicle in the course of doing business, you can deduct expenses or mileage resulting from this, but it's a no-no to deduct mileage accrued while getting to and from your office.
If you run a home based business you can deduct the portion of use that your family car is used for the business, but not for your vacation to Aunt Nellie's. If, however, you happen to vacation in Las Vegas or Tampa and swing by a trade show or convention at the same time, that's a whole different story. You can deduct travel expenses for expenses incurred, weather you own a business or not, if you must travel to a location that is not your usual place of work, but not for trips to and from the office or job site. Employees should use IRS form 2016 to claim these deductions. You should be aware that you must itemize to take advantage of these, and they cannot exceed 2% of your adjusted gross income.
IRS Tax Deduction You Can't Take #2 –
Un-reimbursed medical expenses lower than 7.5% of your adjusted gross income. This has worked for me in the past. A few years ago I had a year that my post insurance medical and prescription drug expenses were around 10% of my AGI . The deduction really helped out, but very detailed record keeping is essential to make this (or any other) tax deduction really work for you.
You'll have numerous small receipts for things such as co-pays that may be only $10 or $20. At the beginning of the year, you may neglect to save these in your tax file. If something should crop up, heaven forbid, that pushes your medical expenditures beyond the 7.5% threshold, you'll need every single one of those receipts to document that fact. So, make sure you save them all, beginning January 1st.
IRS Tax Deduction You Can't Take #3 –
Expenses incurred as a result of fines or criminal penalties, even those incurred through your regular course of business. It makes sense, but every year people try to deduct things such as the speeding ticket they received while driving the company van. Some think it is allowed under Section 162 of the Internal Revenue Code, but some would be mistaken. The IRS doesn't like such claims, so it's better not to make them in the first place. For that matter, deducting any expenses incurred during the commission or as a result of, an illegal act are forbidden.
IRS Tax Deduction You Can't Take #4 –
Meals that you eat while at work are not deductible. If you take a client to a meal, you can deduct a portion of the meal related expense, but you can't deduct that $4.00 for the burrito you had at Chico's lunch wagon yesterday.
IRS Tax Deduction You Can't Take #5 –
Home repair expenses can't be deducted in most cases. Too bad for me, because I just spent $1,300 to get a new water heater installed. That would have been nice to include in the deduction total for 2007. The IRS does not allow deductions for the repair of a home that you use as your primary residence. Repairs are defined as something that “…keeps your property in good operating condition. It does not materially add to the value of your property, or substantially prolong its life.” Certain disasters have been granted exclusions by the IRS. For example, certain losses experienced because of Hurricane Katrina are covered under Internal Revenue Bulletin 2006-28.
If you have rental properties, you can deduct repair expenses as a business expense that you could not deduct were you to them for your primary residence. As a landlord, you can claim such deductions such as interest, repair expenses, insurance, and even travel to visit or inspect your properties, weather it is local or long distance.
IRS Tax Deduction You Can't Take #6 –
Work clothes. You may not take a tax deduction for clothing you purchase for work, unless it is not an article of clothing that you could usually wear while outside of your job. Just because you got a new job and had to by new, nicer clothed than you would usually wear does not mean you can deduct the cost of the new clothes. The only way you can deduct the cost of work clothes is if they would not be worn in the course of everyday activities. Things such as hard hats, uniforms, logo shirts, and the like can be deducted if you are required to purchase them specifically for your job. Sorry, that new Armani you bought to impress the boss doesn't qualify.
IRS Tax Deduction You Can't Take #7 –
Some deductions that you could claim were they to be spent on a rental property cannot be claimed when they apply to your personal residence. These include the cost of home owners insurance, closing costs, contractors and domestic help, utility expenses and depreciation.
Although it would be great if the IRS would allow these deductions, they would likely raise our taxes to compensate. Have a great, Debt Free weekend.