Certified Public Accountants and Consultants

Common Tax Deductions (Schedule A)

Many Taxpayers often wonder if they can deduct certain expensess on their personal tax returns.  Hopefully, after reading the below you will have a better understanding of what and how much you can deduct and save on taxes.   First, you must determine if you itemized deductions will exceed the standard deduction that you are allowed to claim already.   If you total itemized deductions exceed the standard deduction then you should consider itemizing and file Schedule A with your tax retu rn.​   There is however a phaseout of itemized deduction depending of your Adjustable Gross Income.

What's Deductible?

  1. Medical Expenses
    You can deduct most medical and dental expenses you paid for you, your spouse and dependents. Medical expenses are the costs for diagnosis, care, mitigation, treatment or prevention of disease. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. and medical premiums paid. You may not deduct items like childcare, expenses for general health, illegal medications, medications purchased outside the U.S., over the counter medications, cosmetic surgery expenses, toiletries and weight loss expenses.
    in excess of 10% of AGI
  2. Taxes & Interest
    You can deduct State and Local Income taxes, State and Local personal property taxes, real estate taxes and state and local sales taxes. You cannot deduct Federal income taxes, Federal excise taxes such as those on gasoline, per capita taxes You can also deduct home mortgage interest (Form 1098), points, mortgage insurance premiums and investment interest.
  3. Charity
    You can deduct charitable contributions to qualified charities up to 50% of your Adjusted Gross Income (AGI). The deduction can be further limited to 30% of your AGI or even 20% depending on the type of property that is donated. You can not deduct contributions to individuals or non-qualified organizations. You may not deduct contributions from which you receive a benefit.
  4. Casualty Thefts
    If you have something stolen, damaged or destroyed in an accident or by act of nature, you are eligible to a deduct the portion not subject to reimbursement by an insurance company. The first $100 of each loss is not deductible however. Your total deduction for the year must exceed 10% of your AGI in order for it to have an effect.
    and Losses

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Car and Employee Business Expenses

You can deduct your car expenses for the portion that is used for business and not reimbursed by your employer.   You can ither use the actual expenses or opt to use the standard mileage rate of $0.54 or 54 cents per mile.

Other Expenses

You can deduct other expenses subject to the 2% limit that you pay to:
  • Produce or collect taxable income that must be included in your gross income,
  • Manage, conserve, or maintain property held for producing such income, or
  • Determine, contest, pay, or claim a refund of any tax.

You can deduct the items listed below as miscellaneous itemized deductions. They aren't subject to the 2% limit. Report these items on Schedule A (Form 1040), line 28, or Schedule A (Form 1040NR), line 14.
List of Deductions
  • Amortizable premium on taxable bonds.
  • Casualty and theft losses from income-producing property.
  • Federal estate tax on income in respect of a decedent.
  • Gambling losses up to the amount of gambling winnings.
  • Impairment-related work expenses of persons with disabilities.
  • Loss from other activities from Schedule K-1 (Form 1065-B), box 2.
  • Losses from Ponzi-type investment schemes.
  • Repayments of more than $3,000 under a claim of right.
  • Unrecovered investment in an annuity

Unreimbursed Business Expenses

Generally, the following expenses are deducted on Schedule A (Form 1040), line 21, or Schedule A

You can deduct only unreimbursed employee expenses that are:
  • Paid or incurred during your tax year,
  • For carrying on your trade or business of being an employee, and
  • Ordinary and necessary.

An expense is ordinary if it is common and accepted in your trade, business, or profession.   An expense is necessary if it is appropriate and helpful to your business.   An expense doesn't have to be required to be considered necessary.
You may be able to deduct the following items as unreimbursed employee expenses.

  • Business bad debt of an employee.
  • Business liability insurance premiums.
  • Damages paid to a former employer for breach of an employment contract.
  • Depreciation on a computer your employer requires you to use in your work.
  • Dues to a chamber of commerce if membership helps you do your job.
  • Dues to professional societies.
  • Educator expenses.
  • Home office or part of your home used regularly and exclusively in your work. (See Below)
  • Job search expenses in your present occupation.
  • Laboratory breakage fees.
  • Legal fees related to your job.
  • Licenses and regulatory fees.
  • Malpractice insurance premiums.
  • Medical examinations required by an employer.
  • Occupational taxes.
  • Passport for a business trip.
  • Repayment of an income aid payment received under an employer's plan.
  • Research expenses of a college professor.
  • Rural mail carriers' vehicle expenses.
  • Subscriptions to professional journals and trade magazines related to your work.
  • Tools and supplies used in your work.
  • Travel, transportation, meals, entertainment, gifts, and local lodging related to your work.
  • Union dues and expenses.
  • Work clothes and uniforms if required and not suitable for everyday use.
  • Work-related education.

Use of Home Office

Whether you're self-employed, an employee, or a partner, you may be able to deduct certain expenses for the part of your home that you use for business.

To deduct expenses for business use of the home, you must use part of your home as one of the following:
  • Exclusively and regularly as your principal place of business for your trade or business;
  • Exclusively and regularly as a place where you meet and deal with your patients, clients, or customers in the normal course of your trade or business;
  • A separate structure that's not attached to your home used exclusively and regularly in connection with your trade or business;
  • On a regular basis for storage of inventory or product samples used in your trade or business of selling products at retail or wholesale;
  • For rental use; or
  • As a daycare facility.

If the exclusive use requirement applies, you can't deduct business expenses for any part of your home that you use both for personal and business purposes.

For example, if you're an attorney and use the den of your home to write legal briefs and for personal purposes, you may not deduct any business use of your home expenses. Further, under the principal place of business test, you must determine that your home is the principal place of your trade or business after considering where you perform your most important business activities and where you spend most of your business activity time, in order to deduct expenses for the business use of your home.

A portion of your home may qualify as your principal place of business if you use it for the administrative or management activities of your trade or business and have no other fixed location where you conduct substantial administrative or management activities for that trade or business.

An employee may only deduct business use of the home expenses when he or she uses the business part of the home exclusively and regularly and for the employer's convenience.

You also may take deductions for business storage purposes when the dwelling unit is the sole fixed location of the business or for regular use of a residence for the provision of daycare services; exclusive use isn't required in these cases. For more information, see Publication 587, Business Use of Your Home (Including Use by Daycare Providers).
Deductible expenses for business use of your home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs. In general, you may not deduct expenses for the parts of your home not used for business, for example, lawn care or painting a room not used for business.
The follwowing expneses cannot be deducted:

  • Adoption expenses.
  • Broker's commissions.
  • Burial or funeral expenses, including the cost of a cemetery lot.
  • Campaign expenses.
  • Capital expenses.
  • Check-writing fees.
  • Club dues.
  • Commuting expenses.
  • Fees and licenses, such as car licenses, marriage licenses, and dog tags.
  • Fines and penalties, such as parking tickets.
  • Health spa expenses.
  • Hobby losses
  • Home repairs, insurance, and rent.
  • Home security system.
  • Illegal bribes and kickbacks.
  • Investment-related seminars.
  • Life insurance premiums paid by the insured.
  • Lobbying expenses.
  • Losses from the sale of your home, furniture, personal car, etc.
  • Lost or misplaced cash or property.
  • Lunches with co-workers.
  • Meals while working late.
  • Medical expenses as business expenses other than medical examinations required by your employer.
  • Personal disability insurance premiums.
  • Personal legal expenses.
  • Personal, living, or family expenses.
  • Political contributions.
  • Professional accreditation fees.
  • Professional reputation, expenses to improve.
  • Relief fund contributions.
  • Residential telephone line.
  • Stockholders' meeting, expenses of attending.
  • Tax-exempt income, expenses of earning or collecting.
  • The value of wages never received or lost vacation time.
  • Travel expenses for another individual.
  • Voluntary unemployment benefit fund contributions.
  • Wristwatches.

Non-Deductible Expenses

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