Tax deductions the IRS will not approve


expert tax adviceYour review of the information in our “Expert Tax Advice” section should increase your awareness. Understanding what the IRS expects, puts you in a better position to catch errors and omissions by your tax advisor.  Those of you who feel you can prepare a business tax return on your own will also benefit by a review of what’s here.

When you’re ready to have your business taxes done, I strongly suggest you seek the advice of a professional. The tax code includes thousands of pages of information. Rest assured even the best tax advisors don’t know every element of the code. Nor, should he be expected to know it all. If you use a professional familiar with exposure to the type of company you operate, he’ll catch most major deductions and credits.

In addition to his education, he should also have years of experience. He should also be armed with a credible tax software program. This will help him to catch much of what both you and he may miss. Limit your search for a tax advisor to a CPA, an IRS enrolled agent, or a tax attorney. Mass tax operations prepare more personal than business returns and many times their business tax preparers may be promoted personal tax preparers.

In order to help your tax advisor help you, review our list of expenses that are not deductible on your business tax return

  • Business Gifts:

Generally speaking you can not deduct more than $25.00 of the cost of any gift given by your company, to any individual.

  • Clothing you wear to work that is not considered a uniform:

The cost of your clothing you wear to work is not tax deductible unless it is a uniform. A good rule of thumb for determining its deductibility is that if you can wear it away from work its usually not deductible.

  • Commuting Costs:

The normal costs of going to or from work are not tax deductible. Travel from your home to meet with clients or travel from your work location to a client site are deductible.

  • The cost of any asset you capitalize and expect to benefit more than a year:

Any type of vehicle, equipment or real property you expect to be used by your business for a period in excess of a year should be depreciated. The amount determined to be depreciation for the year may be charged to expense for the year. But, never charge the entire cost of a fixed asset expected to benefit more than a year to expense. You tax advisor may find a loop hole. So don’t make it hard for him by forcing him to reclassify a fixed asset out of expense.

  • Dues for clubs that are not trade associations:

Even if you entertain clients, dues for club memberships that are not trade related are not deductible. You can of course deduct the cost of your membership in a professional business or trade association. But, it must be related to your business.

  • Political Contributions:

You may deduct any contribution to a qualified charity as long as it is not political. Contributions to a political candidate or a political party are never deductible.

  • Tax fines and penalties:

Failure to file a business tax return by the due date, failure to file estimated taxes and late payments will cause tax fines and penalties.Unfortunately these fines and penalties are not deductible.

This list is not all inclusive, but they are a partial listing of deductions most commonly mistaken deductions found on business tax returns. Again your tax advisor is the best source of information about deductibility of item for your return. Our expert tax advice section has as its primary purpose to keep you informed. This way, you don’t visit your advisor with a bunch of nonsense he has to charge for, to separate.

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