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TAX SEASON

8 things that are generally believed to be tax deductible but aren’t

You can secure considerable tax breaks on certain items, but filers should be wary of the IRS guidelines.

Update:
Avoid these eight tax deductible mistakes

One of the few pleasures of tax-filing is the ability to claim certain expenses as tax deductibles, saving you money when it’s time to settle up with the IRS.

The tax authority has an extensive list of items that are not subject to taxation - things like business expenses and some charitable payments - but filers should be wary of exactly what is deductible.

To avoid the risk of an unwanted audit come filing time, you should be careful when including these eight things as tax deductibles...

Which business expenses are not tax deductible?

Non-essential business travel

While there are some deductions available to those who need to travel for work, there is a very clear distinction between business and pleasure. If, for example, you’re travelling for work and decide to stay for an extra day, that additional day is not deductible.

Commuting expenses

For most employed people commuting costs are not tax-deductible, how you choose to get from home to your place of work is a matter for you and your employer to decide. Things are different for the self-employed; if you work at more that one location during the day you may be able to deduct the costs of travel between the sites.

Entertainment for business purposes

While entertaining clients and winning business is a key part of many people’s jobs, the expenses accrued in the process are no longer tax deductible. Since 2017 entertainment costs are no longer tax deductible in most instances. Essentially, if it’s enjoyable it’s not deductible.

More tax advice...

Which donations are not tax deductible?

Pledges

You may have agreed to fork out a considerable sum to support a charity of you choice, but until you’ve actually made the payment it’s not tax deductible. You have to be able to show proof of the completed payment to make it deductible.

Undocumented cash donations

In a similar vein, you cannot deduct any cash donations unless you have proof. In some instances charities will be able to provide you with confirmation of a cash donation, but a few coins thrown into a collection tin are unlikely to be deductible.

Non-qualifying charities

Even if you have all the required paperwork to prove your contribution, you should also check that the organisation in question fulfills the requirements. Not all non-profits are tax deductible and some social welfare organisations do not have the required status for a deduction.

Political contributions

Donations to political candidates or parties are not tax deductible, no matter how justified you may feel in supporting your chosen cause. You may, however, help to get them into office.

Volunteer time

No matter how valuable you may deem your time, you cannot deduct it from your tax balance. If you’re partial to volunteering or helping out for free you cannot equate the time given up to a financial outlay.

You can deduct the cost of any supplies you purchase to aid you volunteering, but not the time itself.

Avoiding these eight common tax deductible mistakes can save you a lot of time, unneccesary stress and the prospect of an audit from the IRS.