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Tax Truths and Tall Tales – Part 1

Tax Truths and Tall Tales – Part 1

| February 23, 2021
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With something as complicated as the US tax code, it makes sense that a few tax myths have developed along the way. Often, these myths are centered on what is and isn’t deductible. Here are a few examples that can help you sort fact from fiction.

 

Pet expenses can be deducted.

Fact. If a pet is used for business or medical purposes, its expenses may be deductible. If your pet generates income (e.g., breeding horses), you may be able to deduct some expenses. And if you relocate for work, your pet-related moving expenses would be deductible because the IRS considers your pet a possession. If you need a guide dog or service animal, the IRS allows you to deduct the cost of buying, training, and maintaining it, including food, veterinary care, and grooming.

 

Your daily commute can be deducted.

Fiction. Daily transportation expenses are generally nondeductible. However, if you are traveling to a temporary workplace or business meeting held outside of your normal workplace, there may be an exception to this rule.

 

Rent can be deducted.

Fact. So long as you qualify for the home office tax deduction, you can take a tax deduction for certain expenses, including but not limited to rent, insurance, utilities, repairs, and a security system.

 

All charitable contributions can be deducted.

Fiction. A charity must qualify under section 170(c) of the Internal Revenue Code. While this does include local governments, religious organizations, nonprofit schools, and other charitable organizations, it does not include civic leagues, social clubs, HOAs, and political candidates. If you plan to donate to a charity but you aren’t sure whether it qualifies for the deduction as a tax-exempt organization, go to the IRS’ Tax Exempt Organization Search (TEOS) tool to verify.

 

Stay tuned as our next blog post will cover other tax truths and tall tales. In the meantime, if you have any questions about tax deductions or other tax-related issues, do not hesitate to contact me. I’d be happy to help.

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