Taking as many deductions as you are legally entitled to is a great idea, especially if you want to maximize your tax benefit. However, it may not be as obvious as you’d think when it comes to taking deductions legally. Avoid the following deductions, as they are often used in error.
- Weight Loss Deduction: You need to have a significant diagnosis from a medical professional from a disorder such as Type-2 diabetes, heart disease, or obesity in order to deduct weight loss program expenses. Also, gym and health club membership dues are non-deductible.
- Charitable Contributions: Remember that while you can deduct donations made to charity, the IRS doesn’t allow you to deduct services you’ve given to them. So if you design a website for a community entity, you can’t deduct the fees you would have been paid. Time is not deductible.
- Clothing Deduction: You can deduct clothing donations made as long as they are in good condition. However, you can’t deduct the cost of designer clothes at the tag price you paid. That mean articles of clothing, regardless of brand, are used, and therefore subject to fair market value.
- Charity Dinner Deduction: If you donated to a charity through a dinner, you can deduct the amount you paid – after you subtracted the cost of the actual dinner. For example, if you paid $200 to attend the dinner, which at a restaurant would cost $75, you’re only able to deduct the remaining $125, because the food is considered a benefit. Raffle tickets and casino expenses are not deductible at all.
- Home office Deduction: This is a big one for the IRS. You have to meet strict conditions in order to qualify, such as the place you consider your home office has to be the principal place of business. You must use this area of your home specifically for business purposes and nothing else, and all the business administration must be done there. If you are an employee, working from home needs to be due to your employers convenience, and not just because you want to.