If you want to shrink your tax bill or beef up your refund, claiming all the deductions you’re eligible for can be a smart strategy. Deductions reduce your taxable income. That’s a plus if you want to hang on to as many of your hard-earned dollars as possible. But there are limits on what you can deduct. A financial advisor can help you figure out exactly what you should do with your taxes.Here’s a look at some expenses you can’t deduct in most cases.
1. Pet Care Expenses
Fluffy may seem like a member of the family. But that doesn’t mean you can claim her as a dependent or get a deduction for her day-to-day care. You may, however, be able to claim a deduction for certain animal-related expenses if you own a business or you’ve donated pet food or other items to an approved charity.
2. Commuting Expenses
While business-related travel expenses (including the cost of flights and hotel stays) may be deductible, ordinary commuting expenses are not. If you take a bus, taxi or subway to get to work each day, you can’t deduct those costs on your tax return as business expenses. You may be eligible for a deduction, however, if you’re paying to travel to a training session or conference held outside of your office.
3. Donations to Non-Qualifying Charities
Giving to a good cause can help you out at tax time, but only if you’re donating to a qualified charity. Handing out cash to a friend or relative who’s struggling to find a job, for example, is certainly charitable. But it won’t help you score a tax break.
4. Home Improvement Expenses
Home improvement expenses generally aren’t deductible. One exception involves the renovations you make to a home office. Not everyone can take the home office deduction. But if you have a legitimate reason for claiming it, you may be able to deduct the cost of any upgrades you’ve made to your home office.Capital improvements – changes that increase the value of the home – can be deducted, but not until you sell the home.
5. Gym Membership Fees and Plastic Surgery Expenses
The IRS doesn’t cut you a break if you decide to start hitting the gym or get liposuction. There’s only a possibility that the cost of plastic surgery may be deductible if your doctor deems it necessary for your health and well-being.
6. Time Spent as a Volunteer
Volunteering can be an enriching experience and while there are certain volunteer-related expenses that you can write off, your time isn’t one of them. The IRS does allow you to deduct certain costs associated with volunteering, such as money you pay out of pocket to purchase a uniform and travel expenses that you weren’t reimbursed for while volunteering away from home.
7. Child Support Payments
If you’re on the receiving end of child support payments, they won’t count as taxable income. And if you’re paying child support, you can’t get an extra deduction. Alimony payments, on the other hand, are always tax-deductible if they’re made while a couple is legally separated or divorced.
8. Homeowners Insurance Payments
If you own a home, having the right insurance is a must if you want peace of mind. But unfortunately, there’s no deduction for paying your premiums for a policy that covers your primary residence. You can deduct homeowners insurance premiums for properties that produce income. You can also deduct things like mortgage loan points, mortgage loan interest, real estate taxes and property taxes.
9. Babysitter Fees
The money you pay someone to watch your kids usually doesn’t have a place on your tax return. It may be deductible, however, if you can prove that someone was babysitting your children while you were volunteering for a qualified charity.There’s another upside if you’re paying childcare fees regularly. You may be able to recoup the cost of some of those expenses if you qualify for the Child and Dependent Care Credit.
Don’t Try to Bend the Rules
Attempting to sneak in a non-deductible expense when you file your taxes is a bad idea. If you get audited and you can’t prove that your deductions are valid, you could end up having to pay additional taxes, penalties and interest. Your best bet is to stick to deducting the expenses that have Uncle Sam’s seal of approval.
Tips to Get Through Tax Season
- If you want to get a head start on your taxes, SmartAsset’s tax return calculator can estimate how much you may end up owing in taxes or receiving in a refund this year.
- Deductions aren’t the only way you can save money on your tax bill. Many financial advisors also offer tax minimization strategies as part of the financial planning process. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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FAQs
When it comes to non-deductible expenses in business, anything that has to do with personal spending would not be deductible. So, if you go out for lunch with a few friends and fill your personal vehicle with gas on the way, those expenses are non-deductible.
What job related expenses Cannot be deducted from your taxes? ›
Examples of Different Expenses You Cannot Deduct:
Commuting Expenses. Broker's commissions that you paid in connection with your IRA or other investment property. Political contributions. Legal expenses for personal matters that do not produce taxable income.
What cannot be a tax write-off? ›
Non-deductible business expenses are those that cannot be used as a tax write-off. This includes expenses like entertainment, meals, and travel. These types of expenses are considered personal in nature and are not deductible.
What accounting expenses are not deductible for tax purposes? ›
Personal Expenses
All expenses that are not directly related to the business cannot be considered deductible. Costs such as the use of a car outside of business hours or a personal cell phone cannot be deducted. The same applies to other expenses such as rent.
What is a non-allowable expense? ›
On the other hand, disallowable expenses are costs that are not considered necessary or solely for business purposes. These expenses cannot be deducted from your taxable income.
What deduction can I claim without receipts? ›
What does the IRS allow you to deduct (or “write off”) without receipts?
- Self-employment taxes. ...
- Home office expenses. ...
- Self-employed health insurance premiums. ...
- Self-employed retirement plan contributions. ...
- Vehicle expenses. ...
- Cell phone expenses.
Unfortunately, homeowners insurance premiums aren't tax deductible, unless the property creates a source of income.
What personal expenses can be deducted from taxes? ›
If you itemize, you can deduct these expenses:
- Bad debts.
- Canceled debt on home.
- Capital losses.
- Donations to charity.
- Gains from sale of your home.
- Gambling losses.
- Home mortgage interest.
- Income, sales, real estate and personal property taxes.
Here's what you can still deduct:
- Gambling losses up to your winnings.
- Interest on the money you borrow to buy an investment.
- Casualty and theft losses on income-producing property.
- Federal estate tax on income from certain inherited items, such as IRAs and retirement benefits.
Which taxes are not deductible? Not all taxes are deductible and some items aren't actually classified as taxes. Some examples include employment taxes, federal income taxes, and license fees. No deduction is allowed for foreign property taxes unless it relates to a trade or business or for the production of income.
Common itemized deductions include medical and dental expenses, state and local taxes, interest expense, charitable contributions, and theft and casualty losses, which are explained below. Some deductions are limited by ceiling amounts or by phaseouts that reduce their amounts if your income exceeds specified levels.
What out of pocket expenses are tax deductible? ›
The IRS allows you to deduct unreimbursed payments for preventative care, treatment, surgeries, dental and vision care, visits to psychologists and psychiatrists, prescription medications, appliances such as glasses, contacts, false teeth and hearing aids, and expenses that you pay to travel for qualified medical care.
Can I write off a TV? ›
A television is clearly a personal expense that is not deductible as a business expense.
Which expense is not tax deductible for homeowners? ›
A tax-deductible expense lowers your taxable income, so you'll pay less in income tax. Homeowners can often deduct interest, property taxes, mortgage insurance, and more on taxes. You can't deduct certain home expenses, such as homeowners insurance or costs of refinancing.
Which expense is not tax-deductible for homeowners? ›
A tax-deductible expense lowers your taxable income, so you'll pay less in income tax. Homeowners can often deduct interest, property taxes, mortgage insurance, and more on taxes. You can't deduct certain home expenses, such as homeowners insurance or costs of refinancing.
What prepaid expenses are not deductible for tax? ›
The general rule is that you can't prepay business expenses for a future year and deduct them from the current year's taxes. An expense you pay in advance can be deducted only in the year to which it applies.
Can I write off groceries on my taxes? ›
Grocery costs are tax-deductible once you're away from home and traveling for business. As long as you're away overnight, you can deduct 50% of your grocery costs (as long as they're not lavish or extravagant). The same is true for meals, snacks, beverages, and even coffee.
What out of pocket expenses are tax-deductible? ›
The IRS allows you to deduct unreimbursed payments for preventative care, treatment, surgeries, dental and vision care, visits to psychologists and psychiatrists, prescription medications, appliances such as glasses, contacts, false teeth and hearing aids, and expenses that you pay to travel for qualified medical care.
