1. Some Expenses Are Just Not Deductible
We don’t want to pay a lot of taxes. That’s only understandable since for many it’s like
giving away our hard earned money. That being said taxes are an integral part of life
(much like death is) and like it or not you are bound to have to pay them.
Of course, it doesn’t mean you have to pay a lot. That’s why many of us try to lower the
taxes that we have to pay as much as possible. A way to do that is to get as many
deductions as possible. With this you get to lower your income base so you fall under a
lower tax bracket thereby paying lower taxes.
However, you do need to be careful. That’s because not all deductibles can be
deducted. That is to say, just because you think you can deduct so and so expenses
doesn’t necessarily mean the IRS will agree with you.
Take your home phone line for example. Let’s say you have a home based business
and use your home phone primarily for business purposes. While you may be inclined
to deduct the cost of that phone you can’t. That’s because the IRS considers the first
phone in the home as a personal expenses.
It’s not all that bad. You can simply deduct all the charges that you accrue for those
business related phone calls. Also, if you put in another phone line for the use of your
home business then the expenses for this one is deductible so maybe this is a better
deal for you.
When it comes to commuting to work I’m sorry to say but that’s a no-no. All the cost of
going to and from work is your own personal expenses so you can’t deduct it even if you
live far away from your workplace. That being said you can deduct expenses accrued if
you go from one workplace to another (even if it’s not the same employer). The same is
true for expenses accrued going to meet clients and other out-of-office events and
meetings.
See more from Deborah Koval.