Non-Deductible Expenses Overview
Determining what is and what is not a deductible expense can be a frustrating and inexact exercise. Particularly daunting is the fact that if you make the wrong determination about an expense, it could result in an audit, interest, and penalties.
Below is a checklist for you to use in identifying expenses the IRS has determined are non-deductible. The list is not all-inclusive, but contains the most common nondeductible expenses. In other words, when preparing your taxes, do not assume that an expense is deductible just because it's not on this list.
| _______ | Broker's commissions that have been paid in relation to your IRA or other investment property |
| _______ | Burial or funeral expenses, including the cost of a cemetery lot |
| _______ | Capital expenses |
| _______ | Car licenses |
| _______ | Marriage licenses |
| _______ | Dog tags |
| _______ | Home repair, insurance, and rent |
| _______ | Hobby losses |
| _______ | Illegal bribes or kickbacks |
| _______ | Personal disability insurance premiums |
| _______ | Personal living or family expenses |
| _______ | The value of wages that were never received. |
| _______ | Lost vacaction or sick time |
| _______ | Campaign expenses and legal fees associated with running a campaign |
| _______ | Check-writing fees on a personal checking account |
| _______ | Membership dues for any club organized for business, pleasure, recreation, or other social purpose (this does not include professional societies) |
| _______ | The cost of transportation between your home and your main or regular place of work |
| _______ | Fines or penalties paid to a government entity for violating a law |
| _______ | Health club expenses, even if your are required to stay in shape for your job |
| _______ | Homeowners' insurance premiums |
| _______ | Home security systems, assuming you do not have a home office in your home |
| _______ | Expenses related to attending a convention, seminar, or similar meeting for investment purposes |
| _______ | Life insurance premiums, unless they are part of an alimony payment |
| _______ | Lobbying expenses to influence legislation, to participate in any political campaign for or against a candidate, to influence the public in regard to elections, legislative matters, or referendums, or to communicate directly with branch office officials to influence official actions |
| _______ | Any portion of a contribution to a tax-exempt organization that is used for lobbying purposes |
| _______ | Expenses related to eating lunch with your coworkers, except while away on business |
| _______ | Expenses related to meals necessitated by working late unless you are out of town or it is part of entertaining clients |
| _______ | Legal expenses associated with gaining custody of your children |
| _______ | Legal expenses associated with civil or criminal charges resulting from a personal relationship |
| _______ | What you have to pay in damages in a personal injury suit |
| _______ | Legal fees associated with preparing a will |
| _______ | What you have to pay in a divorce settlement |
| _______ | Contributions made to a political candidate, campaign committee, or newsletter fund |
| _______ | Accounting certificate fees for the initial right to practice accounting |
| _______ | Bar exam fees and other incidental expenses in obtaining admission to the bar |
| _______ | Medical and dental license fees to obtain initial licensing |
| _______ | Expenses associated with radio and television appearances meant to increase your personal prestige or professional reputation |
| _______ | Contributions made to a coworker who can not work due to illness or job-related injuries |
| _______ | Basic local telephone service charges for the first telephone line to your residence, regardless of whether it is used for business |
| _______ | Expenses associated with attending shareholder meetings if your only association with the company is your stock investment |
| _______ | Expenses associated with producing tax-exempt income |
| _______ | Interest on a debt incurred to purchase tax-exempt securities |
| _______ | The cost of a wristwatch, even if your job requires strict timeliness |
| _______ | Clothing for work that is not worn as a condition of employment or is suitable for everyday wear |
| _______ | Most personal interest |
| _______ | Most service charges |
| _______ | Annual fees on personal credit cards |
| _______ | Finance charges on credit cards, installment contracts, and revolving charge accounts incurred for personal expenses |
| _______ | Late payment charges by a public utility |
| _______ | Federal income taxes |
| _______ | Most estate, inheritance, legacy, or other succession taxes |
| _______ | Gift taxes |
| _______ | Social security taxes withheld from your pay |
Get In Touch with an Attorney to Learn More About Non-Deductible Expenses
While expenses can definitely help reduce your tax liability, they're only helpful if they're actually deductible. When you're preparing your taxes, you may want to enlist the help of an expert tax attorney to ensure that you're claiming all the right expenses.
