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What I cant deduct that
NEW YORK (3/17/10)--There’s no lack of tax-time publicity covering deductions for home and car buyers, individual retirement account (IRA) contributions, and even energy-efficient furnaces. With all the coverage, you might think you can write off almost any expense. Not so. Here’s a list of 10 common nondeductible items that just beg for trouble with the Internal Revenue Service (walletpop.com March 9):
* Gambling losses. Tax law is on the side of Lady Luck. Gambling winnings are taxable, but if you don’t have any winnings, you can’t deduct losses. If you lose more than you win, you can’t claim the excess. * Child support. Court-ordered alimony, or spousal support, is deductible. Child support is not. However, you may be able to deduct child-related expenses such as child care (irs.gov). * Roth IRA contributions. Many people make an IRA contribution by April 15 for that last-minute deduction. It doesn’t work that way for a Roth IRA. With a Roth IRA you can withdraw tax free; you can’t deduct contributions. With a traditional IRA, withdrawals are taxed. * Job change expenses.You can deduct expenses that help you maintain or improve your job performance, or are required by your employer or by law to keep your salary, status or job. Expenses that will help you qualify for--or find--a new job don’t count. * Commuting costs. The expense of getting to and from work isn’t a valid deduction. But you can deduct car-related expenses while on the job, such as traveling from one site to another, visiting customers or vendors, or attending business meetings off-site. * Personal legal expenses. Writing a check to defend a homeowner lawsuit or to recover losses from an accident seems like it should be deductible, but it’s not. Legal fees for personal actions aren’t a tax write-off. There’s an exception for individual taxpayers using attorney services related to obtaining tax advice. * Hobby losses that exceed hobby income. You may make a nice side income selling your homemade crafts on Etsy. If so, you’ll need to report income on your tax return. You can report expenses, but only to the extent that you have income. * Your time. When you volunteer for a charity, your reward is service and that warm fuzzy feeling. There’s no tax deduction, even if the value of your time is easy to ascertain, say, for a therapist or lawyer who bills by the hour. The good news is, you may deduct certain out-of-pocket expenses such as mileage. * Weight loss programs and health club memberships. The only way you can take this deduction is as a treatment for a specific disease diagnosed by a physician, along with an order for the treatment that lists a weight-loss program and gym membership. And then, the deduction only applies if the cost exceeds 7.5% of your adjusted gross income (irs.gov). * Home repairs. Unless your repair is the result of a federally declared disaster or loss from damage from unusual events like a flood, fire, or earthquake, you generally can’t take a deduction. Casualty losses have tax relief, but that’s not how you want to save on the tax bill.
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