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Posted by: Maricopa Lawyers on Aug 7, 2015

While we all do our best to minimize the inevitable, there’s a thin line between maximizing the amount of money you save on your tax bill and making tax deductions that will cause a stir, and possibly lead to an audit. There are also common myths about what is deductible and what isn’t. Here’s more info on tax law to clarify some of those myths.

Entertaining Clients

This is the classic wine-and-dine a client scenario. When you take a prospective client out on the town, the IRS assumes that you’re having your share of the fun, so you’re only allowed to deduct 50 percent of the tab. It’s also useful to document which client you’re taking out and the type of event you attended.

The Cost of Your Commute

If you work far from home and it’s costly to show up to work every day, the IRS does not allow you to deduct the cost of gas, mileage, etc. If you use some other type of transportation, you’re still not allowed to deduct commuting costs. In the eyes of the IRS, it was your choice to work far from home. Possible exceptions to this include the costs of traveling to off-site meetings or if you work at more than one workplace per day.

Pets

Although you may consider your furry friend a member of your family, the cost of caring for them is not deductible. Pet-related expenses are considered routinely personal by the IRS. Exceptions apply for service animals or guard dogs. .

Charities That Don’t Qualify

It’s a very common assumption that charitable contributions are tax-deductible, but you must make sure that the charity qualifies. The nonprofit status of the organization doesn’t automatically mean that donations to the organization are deductible. There are several social welfare and civic organizations that don’t qualify. Even if a charity does, you can’t deduct the portion of a donation for which you receive some type of benefit. An example of this is if you donate $100 and attend a dinner in exchange.

Political Contributions

If you give money to a specific candidate, or a group working on a candidate’s behalf, you can’t take that money off your taxes. You might, however, get your candidate elected to office.

Audits can be a nightmare, and a problem that doesn’t go away quickly. If you’re experiencing some trouble with the IRS, or if you own a business, speak to an experienced professional who’s well-versed in current business law.