8 Tax Deductions to AVOID
You should take as many deductions as you can, up to a point. That point comes when you break the law. Keeping your tax deductions legal may not be as easy as you think. Here are the top 8 deductions to avoid (since orange isn’t your color):
Lose The Weight, Dump The Deduction.
So you’ve joined a gym, or a weight-loss program to shed those extra winter pounds. Good for you, but not necessarily for your taxes. Although some weight loss expenses are deductible, gym and health club memberships do not qualify. Neither do weight loss programs, unless you have a serious diagnosis that requires you to lose weight, such as obesity, Type-2 diabetes, or heart disease.
Serve Your Community, Spare Your Tax Return.
Say that you’re a graphic designer, accustomed to earning at least $50 an hour when you work for advertising agencies and magazines. When you spend three hours designing a brochure for the local museum, you figure that’s a contribution worth $150. Bad idea. The IRS does not allow deductions for services to charitable causes.
Donate Designer Clothes, But Not At Designer Prices.
If you bring your $500 ball gown to the local hospital’s thrift store, you may be tempted to deduct the $500 you paid your your gown. Don’t. You can only use fair market value for the item as it is on the day it is donated. (And, sadly, that dress is used.)
Enjoy The Charity Dinner, But Don’t Forget To Pay For Your Food.
Say that you paid $200 to attend a charity dinner. You can’t deduct the whole $200 because you must first subtract the fair cost of the dinner itself. If a comparable meal in a nice restaurant would have cost $75, you can only deduct the remaining $125. By the way, if you bought raffle tickets or played in a charity casino, those expenses are not deductible at all.
Work From Home, But Be Cautious About Deducting It.
The IRS tends to look closely at deductions for home offices, so don’t take that deduction unless you’re sure you meet the stringent conditions for doing so. If you’re self-employed, it should be your “principal” place of business, meaning that even if you work at other locations, the administration of your business has to happen at your home and nowhere else. Also, the portion of your home you deduct must be used only for business and nothing else. (Even if you don’t meet this test, you can deduct a part of your home where you regularly receive clients, such as a portrait photography studio or massage room.) If you’re an employee, you must meet the above tests, and you must be working from home for your employer’s convenience, not your own.
If you’re in doubt whether you meet all these tests, you’d be safer to avoid any deductions for your home office.
No Tax Deductions For Nose Jobs.
Cosmetic surgery is not tax-deduct