As we inch closer to the end of this tax year and leap into the new tax filing season, the following is a list of items to NEVER deduct on your tax returns or else you will be answering to the IRS with your checkbook in hand. Heed the warning.
1st: I know you all pay lots of money protecting your biggest investment, your home, but never deduct home owner's insurance on your tax return. As tempting as it may be, it is not allowed. The only insurance that may be allowed a deduction is Private Mortgage Insurance, better known as PMI, but you need to check each tax season as this deduction may or may not qualify as a deduction for you.
2nd: I can't tell you how many people come to me with this one each year because so many people nowadays have a "side hustle" and use their home to work out of and they want to use their home telephone as an expense because they use that telephone to make business calls. So sorry, but the IRS does not allow it. The IRS considers your primary landline in your home to be your personal telephone. However, there is a bit of hope in this one. If you get an itemized bill from your telephone carrier and you can prove that there are long distance business related telephone calls on that bill, those calls can be deducted. Also, to avoid any misinterpretations, if you get a second landline in your home and use that line for business purposes only, then that telephone line can be deducted.
3rd: Oh how I have argued with client's over this one. No, no, no, you cannot deduct commuting to and from work from your tax return. I don't care if you sat on the train for two hours and worked the entire time for your employer during that commute, you still cannot deduct it. The IRS considers your transportation to and from work to be your personal commute to get to and from you job, Period. However, once you get to work, if you commute during working hours, traveling for your employer, to and from client's and or to run employer related errands, any expenses incurred during this travel can be deductible.
4th: Yes you love them and yes you consider them to be family but, no you cannot deduct your pet on your tax return. Yes you all spend a fortune feeding, housing and medically caring for them but still, the IRS will not allow you to deduct them. Speaking of medical care though, this item too has a loophole in it. If, and only if, you have a pet that is a service animal used hearing, visual or physically impaired, then you can use an itemized medical deduction to deduct the cost of buying and caring for that pet.
5th: This one is another HOT topic with client's who just want to argue over their frustration of payroll deductions but the answer is always the same, no you cannot deduct your social security taxes from your tax return. I know the money was taken from your check with your federal and state taxes and yes I know those taxes are on your return, but no, social security taxes are not tax deductible. Yes it is a hard hit on each paycheck but it's one of those items you just have to hand over and hope that once it's time for you to retire, there will be money left in the social security coffers that you are helping to fill so that one day you too may receive your benefits. There is one side note to this social security tax. Social security tax does have an annual cap, a cap that usually changes annually, and many people are working more than one job, with each job taking social security tax from your earnings. In this case, if at the end of the tax year, all your employers combined have deducted above the social security tax cap, you will receive a refund of those excess social security tax deductions.
6th: The vanity in us all has us crazy over this one but the answer here is a big no when it comes to deducting plastic surgery expenses. First of all, you need to qualify for an itemized tax return before you can even try and deduct any medical expenses. That being said, if you are entitled to deduct medical expenses, the IRS does not allow any deductions for the sake of vanity or whatever classification you would like to place on these types of procedures. That being said, there is a "What If" involved here. What is your doctor stated that this "procedure" was medically necessary? Well, now you have yourself a deduction. If the procedure you are having is medically necessary because you were born with a malformation or maybe you were injured in an accident which caused damage that needed to be repaired or even if you were having trouble breathing because you have a "deviated septum", these medically necessary reasons are all deductible. In other words, wanting surgery to look like Angelina Jolie so that you can get some acting jobs is not a medical necessity. Getting a gorgeous brand new nose because you couldn't breath, well now, deduct away.
7th: Here is one that I'm sure you have driven your tax preparer crazy with. You go to work every day looking "fly". Your wardrobe cost you thousands and thousands of dollars and you only wear the best because you have to represent your employer and you have a reputation to uphold. None of those clothes in your wardrobe have ever even seen the inside of your washing machine because they are Dry Clean Only. You spend a small fortune on their upkeep and you want to deduct this dry cleaning expense however, the answer is nope. It doesn't matter if your boss says you must wear the best to work, you cannot deduct these expenses. The only clothing and clothing maintenance expenses that you will be able to deduct are uniforms. Do you work for UPS or FEDEX or maybe you're a doctor who wears scrubs and lab coats? The clothing must be work clothes if you're looking to take a deduction. If you wear clothing at work that can be worn on an every day basis (regardless of whether or not you wear them places other than work), than this is another deduction not to attempt to include in your taxes.
8th: I am often asked whether or not time spent volunteering is tax deductible and unfortunately, the answer is no. Your actual time is not tax deductible. When you think about this, just keep in mind that the reason you are doing it in the first place is because you felt the need to give and just leave it at that. That being said, there are two items in the volunteering category that you may be able to deduct if your tax return qualifies. Those two things are the mileage you incurred for your charitable work and the second is any unreimbursed expenses that you incurred. For example, you volunteered to run the church bazaar and you went out and purchased poster board and markers to make signs. You could deduct the mileage incurred and the expense for the supplies, but not any of your personal time doing this volunteer work.
9th: Medication. What is the difference if you take an over the counter 400mg Motrin or an 800mg doctor prescribed Motrin? They are both Motrin and they are both for the same ailment so the question is can you deduct the over the counter one? Well, the answer is no. Regardless of whether your doctor told you that you don't need prescription strength but you do need an over the counter strength, you cannot deduct the over the counter medicine. And, it doesn't matter if you took two of the 400mg over the counter Motrin to equal one prescription strength Motrin, if you do not have a prescription for medication prescribed by your doctor, you cannot deduct the medication expense. There are a couple of exceptions to this rule that allows you to take a deduction for over the counter items and one of the main exceptions are for diagnostic testing. You can deduct a diagnostic test for pregnancy and you can also deduct diagnostic diabetic items.
So, the moral is to make sure you always keep great records. If you are unsure, keep the records and ask your tax preparer when you see them. Never assume, always ask.
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