How many times have you dipped into your wallet, or bank account, to pay for something and said, "I wish I could write that off?" There are often deductions available on our taxes that we don't even know about, but there are also many everyday expenses that we wish we could lower our tax bill with, but can't. Here are five expenses that taxpayers often try to claim, only to find their deductions have been denied. (To know about tax deductible expense, read: 10 Most Overlooked Tax Deductions.) TUTORIAL: Personal Income Tax Guide: 6 Overlooked Deductions And Credits
It makes intuitive sense that you should be able to deduct the cost of work clothes, if you have to wear suits or other dressy outfits, that you wouldn't otherwise have to buy. However, you cannot deduct these expenses, though there are some exceptions to this rule. If you are required to purchase a uniform, in order to work at your job, you can deduct it. The uniform must be specifically work-related, and unable to be worn anywhere else. If you are a restaurant server, for example, and are required to wear a white shirt and black pants, those would not be deductible as they are considered normal clothing and can be worn elsewhere. On the other hand, if you are required to purchase a mechanic's jumpsuit with the company logo on it, you can deduct it. The other exception is stage clothing for entertainers.
Owning a cat or dog can get expensive, with the cost of pet food and veterinary bills. Although some taxpayers have tried creative ways to claim their pets on their taxes (as dependents or security systems, for example), in general, pets are a non-deductible expense. If you require a service dog, because of a medical condition, however, you can claim the costs of feeding and maintaining it as a medical expense.
Driving to Work
Gas and other car expenses, related to driving to and from work, are also not deductible, although they may be considered work-related. This is true for both employees and self-employed individuals. If you are self-employed, however, you can perform a business-related task on the way to the office and make the entire trip deductible. For example, if you make your business bank deposits on the way home from work, your mileage can be claimed. (To know more about tax benefits for self-employed individual, check out: 10 Tax Benefits For The Self- Employed.)
Money that you spend making your home better than it was before is not deductible. This includes the case if you are improving your home office, and are otherwise eligible to claim home office expenses. Improvements to your home, such as an addition or an extensive renovation, increase the value of your home and you will, theoretically, get the money back when you sell your house. Many taxpayers build new walls and renovate basements in order to set up a home office. Your renovations may result in higher property tax bills, which are deductible if you itemize your expenses. (For additional reading, check out: How To Qualify For The Home-Office Tax Deduction.)
Almost everyone pays bank fees, and with the banks raising fees left and right, more taxpayers are questioning whether they can write them off. In most cases, the answer is no. Bank fees that relate to your regular checking account are considered personal expenses and are not deductible. Those related to non-tax-advantaged investment accounts, may be deductible as an investment expense.
The Bottom Line
Do your homework before trying to claim expenses on your tax return in order to avoid tax audits and save yourself interest and penalties. Some day, these expenses may be deductible but, in the mean time, keep them off of your return.