Tax Deductions That Aren’t Allowed By the IRS

tax deductionsGetting a tax deduction for an allowed expense on your taxes is great. Making the mistake of claiming a deduction that is not allowed by the IRS can you get into trouble and a possible audit. For example, you can deduct the expense of a dinner with clients up to 50% of the bill only. If you claim more than the 50% allowed or you do not properly record the business purpose of the meeting, the deduction could be thrown out.

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Travel is similar to entertainment were only the part of the travel that is business related can be deducted. If you take your family or your spouse with you and do things on your trip purely for pleasure, those parts of the trip cannot be deducted on your return.

Commuting costs are only allowed from one business location to another business location. The commute from your home to the office is not something you can deduct on your taxes.

Make sure your charity giving is to IRS recognized organization or the donation will not be deductible. And if you get something, like a night at the opera, in exchange for you donation, you need to subtract the fair market value of the benefit you receive from the donation that you claim.

And the  IRS has made giving to charities without a proper record not something you can deduct. You could previously deduct small amounts of cash that you gave to charities. But now it is required that you have proof of the donation to get the deduction. So write a check instead of giving cash.

TurboTax ItsDeductible Is Going Mobile

On December 3, 2013, Intuit Inc announced that its’ new TurboTax ItsDeductible app for iPhone had become available. This app is aimed at helping the estimated seventy-five percent of US citizens who donate to charity, convert their goodwill into sizable tax deductions. This app is free of charge and offered on the iPhone with iOS7 app store.

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The Turbo Tax online program itself is very popular. When combined with the portability and convenience of a mobile device, the TurboTax ItsDeductible app allows people to easily monitor their charitable donations. This app features valuations for over ten thousand commonly donated items, like toys, clothing, sporting goods, games, appliances, household products and more.

Although most taxpayers are aware that non cash donations might be tax deductible, they do not always value the goods they donate to charity correctly. Usually, this is because they have just guessed the value randomly. For example, sometimes, bags of clothes are donated with $50.00 valuations, when the real value is over $300.00.

Prior to leaving a donation facility, people can easily and quickly input their donated goods into TurboTax ItsDeductible. Then, the app will automatically make a fair market valuation, based on guidelines by the Internal Revenue Service. This ensures that users receive the full deductions they are entitled to on their tax returns. The app uses location sensitive technology to quickly capture the address of the charity, for tax record keeping. All philanthropists should monitor their donations with this app, to be properly rewarded for their generosity.

After The Events In Boston And Texas, Charity Scams Are Common

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Charity Scams Are Common

When you use TurboTax to file your taxes, you may notice that you can write off the money that you gave to charities. This is a good way to reduce your total tax bill or get a bigger return, and you get to help the victims of tragedies at the same time. However, the IRS has said that taxpayers like yourself need to be aware of common charity scams that can cheat you out of your money.

Walk for Cancer - it's raining!
Walk for Cancer – it’s raining! (Photo credit: miamism)

Many charity scams crop up after every tragedy, and the ones in Boston and Texas are no exception. Most of the time, charity scams will be set up to look like real charities that you may have reported contributions to on TurboTax before. They could mimic the name, the color scheme and other important aspects. Always make sure that you check with the IRS to see if the charity is verified before donating.

It is also important that you never give out your social security number, your credit card numbers, or any other personal information. Some charity scams will use these things to steal your identity, and they can then steal your money later on, above and beyond what you donate so that you can write it off on TurboTax. On top of this, you never want to donate cash just in case the organization is a charity scam. It is easier to report transactions on TurboTax if you donate with a check or a credit card, and this means that you have a record of the transaction if it is a scam.

Top Ten Most Overlooked Tax Deductions

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Each year the Internal Revenue Service (IRS) reports the most common tax deductions taxpayers forget about when submitting their income tax return.  Among one of the most common mistakes taxpayers make is they forget to place their Social Security number on the form or they make a mistake when entering the information.

It is possible for some taxpayers to be overpaying so it helps to make sure you review deductions available and understand how to claim them correctly to obtain the credit.  Below is a list of the most common deductions overlooked by taxpayers:

  1. State sales tax: Taxpayers who live in a state that doesn’t impose an income tax often forget to claim this deduction.  The IRS has a table that can be used to help you figure out the amount to deduct.
  2. Charitable contributions: This includes charitable deductions from your paycheck, items purchased for a charitable event such as a fundraiser or if you drove your vehicle for charity, the IRS lets you deduct a certain amount per mile.  Save all receipts and if you make a donation of 250 or more, get written confirmation from the charity.
  3. Student loan interest: If mom or dad paid for a student loan for a child not claimed as a dependent, the interest can be claimed on your return.
  4. Moving expenses: If you moved to take a new job, the expenses related may be deductible.
  5. Child care credit: Having a credit can help reduce taxes owed.  If your expense is paid through an account at work, it is easy to overlook but if you pay several thousand for child care it helps reduce taxes owed.
  6. Earned income tax credit: While the rules to this may be complex, many taxpayers don’t claim it.  This is considered a refundable tax credit instead of a deduction.
  7. State tax paid last spring: If you paid state income taxes in quarterly payments or had them withheld, they can be deducted on your current return.
  8. Energy-saving home improvement credit: This is a credit that is 30 percent equal to the cost of energy-saving improvements.  The IRS provides details on qualifications for this credit.
  9. Jury duty payments:  If your employer required you to give them payments you receive for jury duty, you can claim the amount on your return.
  10. Refinancing points: There are points that can be deducted when you refinance your home at one time.  This depends on how many years are on your mortgage and you can deduct points that are remaining if you sell you r home after paying if off or refinance again.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to loans.