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 legitimate income tax deductions, many of which are often overlooked because we may not know about them. But there are also many everyday expenses that we rationally believe we could use to lower our tax bill, but actually can't. Below are five expenses that taxpayers often try to claim, only to find their deductions have been denied.
It makes intuitive sense that you should be able to deduct the cost of work clothes, especially if you have to wear suits or other outfits that you wouldn't otherwise buy. But you cannot deduct these as work-related expenses. Still, 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 some performers or entertainers.
Owning a cat or dog can get expensive, with the cost of pet food, supplies, 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. This is true for both employees and self-employed individuals. If you are self-employed, however, there are special tax and other benefits for which you may be eligible. If you perform a business-related task on the way to or from your office, you can deduct the entire trip. For example, if you make your business bank deposits on the way home from work, your mileage can be claimed.
Money that you spend improving your home is not deductible. This includes improvements to a home office, for which you are otherwise eligible to claim home office expenses. Improvements to your home, such as an addition or an extensive renovation may increase the value of your property, which may allow you to recoup those renovation costs with the sale of your home. They also will increase your property tax bills, which are deductible.
There are ways to qualify for the home office tax deduction. Many taxpayers build new walls and renovate basements in order to set up a home office. But qualifying for the home office tax deduction comes with very specific requirements.
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.
The Bottom Line
The Internal Revenue Service (IRS) tax rules tend to change frequently. So it's important to remain up to date. Do your homework before trying to claim expenses on your tax return in order to claim all legitimate but no improper deductions, avoid audits, and save yourself interest and penalties.