8 Write-Offs, Unfortunately, You Cannot Write Off On Your Taxes This Year

8 Write-Offs, Unfortunately, You Cannot Write Off On Your Taxes This Year

There are a lot of things you can write-off as a business expense, but not everything qualifies. A lot of people don’t know what qualifies as they don’t understand where the money comes from.

As David and Johnny Rose argued:

Johnny: “David, a write-off is a business expense used to reduce your taxable income!

David: Okay, well then why isn’t it called a “tax write off?”

Johnny: It is! It is! You can’t just buy things for yourself, and write them off!

Well, in case you’re wondering what you CANNOT write-off, here’s a list of some of the things.

  1. Entertainment related to business

The IRS assumes that when you take your clients out, you’re not just talking business, but might be having some fun as well. Before 2018, the IRS allowed you to deduct 50% of your entertainment if it was well enough documented as entertaining clients. Generally, the IRS no longer allows business entertainment as part of your tax deduction.

  1. Business travel

Once again, the IRS distinguishes between what is business and what is a pleasure. Some things are deductible during business trips, but if your family joins you to a destination where you’re meeting a client for dinner, the dinner is deductible but not the trip as it will be regarded as a pleasure.

  1. Commuting costs

The IRS believes that you chose your primary employment and its distance, ergo you chose your commute and that makes it your responsibility. Your commute to your primary employment cannot be deducted, regardless of cost, time, and transportation. If you instead are self-employed and have multiple workplaces a day, you may be able to deduct some of your travel expenses—either going to meetings or between locations.

  1. Charities that don’t qualify

Some charities are not as charitable to your tax deduction as you’d think. Some charities don’t qualify, so if the tax deduction is important to you, make sure your charity of choice qualifies. It is also important to notice that if you benefit in any way from your charity, that has to be deducted, e.i. If you’re going to a charity ball and you donate $100 you have to retract the price of the dinner before claiming it as a deductible.

  1. Pledges

Just because you promised to give money, doesn’t mean the IRS trusts you enough to let you deduct it. You need proof to receive the deduction. If you run a charity drive from September on, you can only deduct the charitable amount from between September to December, and only if you have proof that you followed through on your promise.

6. Undocumented cash donations

The IRS has made it more difficult to deduct small cash donations. You have to be able to document all your donations. If you throw money into a collection plate or give cash to a cause during work hours, the IRS may remove those as deductible because of the lack of proof.

7.Political contributions

If you want your favorite politician to win, you might think it’s a great idea to contribute to their victory monetarily and then deduct it from your taxes – but you’re not that lucky. These donations are not tax-deductible. You win some and you lose some here: your tax deductions are taking a hit, but hey, your candidate might get elected!

8.Volunteer time

Time equals money, but not in this instance. Your time does not qualify as a deduction. Even if you are performing duties unlike the ones you regularly do, you cannot deduct something you volunteered to. If you end up having any unforeseen expenses, (not transportation or lunch, but supplies) these can be deducted.

If all these loopholes and specifics make your head spin, you can hire an accounting firm that is well versed in the rules and regulations. The team at MBA Financial & Accounting is CPA certified and will ensure the most accurate and efficient reporting for you and your business while keeping out of costs low and maximizing returns. For the best financial accounting near Los Angeles, visit MBA Financial & Accounting’s list of services here, or to talk to an experienced CPA certified professional today call (800) 576-5746.