Wednesday, January 26, 2011


A magazine editor recently asked me for a list of items that taxpayers think are deductible but are not. I thought my might be interested in my response.

  • Reimbursed Job Expenses. It's true that you can deduct unreimbursed business expenses as an itemized deduction. The issue is that if the expenses are reimbursed, to the extent that your employer pays you back for any of those costs, those portions of the expenses are not deductible.
  • Diets and Health Club Dues. Most diets and health club dues aren't deductible even if your doctor has recommended that you lose some weight in order to improve your health. Unfortunately you cannot deduct the cost of expenses that are merely beneficial to your health. To be deductible, the diet or exercise plan must be specifically prescribed by a doctor for a diagnosed medical condition, not as preventative care. Some limited exceptions apply.
  • Primary Telephone Landlines. The IRS considers a primary telephone line routinely personal and thus, not deductible. You may not pro rate the cost of the phone even if you can prove non-personal use. You can, however, deduct long distance and other related charges if you can prove business use.
  • Home Improvements. Home improvements are considered personal expenses and therefore not deductible. But wait... under current law, you can get a tax credit for the purchase and installation of certain energy-efficient improvements.
  • Campaign Expenses. Thinking of running for office? Expenses incurred as part of your election campaign aren't deductible on your federal income tax return. In addition contributions made to a candidate are not deductible.
  • Commuting Costs. While it's true that you can deduct certain travel expenses related to your job (such as traveling from one workplace to another in the course of your job or business; visiting clients, vendors or customers; and going to a business meeting away from your workplace), you can't deduct the costs of commuting to and from work.
  • Charitable Services. You may deduct the cost of goods and cash that you donate to qualified organizations but you cannot deduct the value of your time.
  • Pet Care. You may not deduct the cost of taking care of your pet even if your pet incurs significant medical expenses. An exception applies with respect to guide dogs and service animals -- you can include the costs of buying, training and maintaining those animals as part of your deductible medical expenses.
  • Attorney's Fees. Attorney's fees may be deductible for businesses, but as a general rule, individual taxpayers cannot deduct most legal fees. This includes attorney's fees related to divorces, disputes over property boundaries and personal injury cases. Those legal disputes are considered personal in nature, which means the IRS won't allow you to take a deduction for them. related to producing or collecting taxable income.