Every tax-filing season, the great quest by filers is to find the most tax deductions. But there are some deductions you should steer clear of.
If you claim these wrong write-offs, you'll deduct expenses that don't meet Internal Revenue Service guidelines.
And that means you'll end up spending time with a tax auditor and paying more in taxes, penalties and interest.
Bankrate doesn't want that to happen to you, so we've put together this list of expenses you might be tempted to claim. Don't you dare!
But don't get too upset. We've also provided some related tax breaks that do pass IRS muster and will lower your tax bill.
Read more: Don't You Dare Deduct These Expenses
The hazard policy you bought to cover damage from fires, tornadoes, hurricanes, winter storms and other disasters, as well as for more-routine mishaps, offers peace of mind. What it doesn't provide is a tax deduction for the insurance premiums.
But if you meet some tax law guidelines, you can deduct private mortgage insurance, or PMI, on your 2012 tax return. PMI is the insurance your lender requires you to buy if you don't put down a big enough down payment. PMI premiums are deductible as an itemized expense (it goes on Schedule A with your mortgage interest claim) as long as the mortgage insurance policy was issued in 2007 or later. This tax deduction is in effect through 2013.
You also must meet income requirements. If your adjusted gross income is $100,000 or less (or $50,000 and you're married and filing separately), your full PMI premium amount is deductible. If you make between $100,001 and $109,000, the amount of PMI that you can deduct is reduced. And if your income is more than $109,000 ($54,500 married filing separately), you can't deduct PMI at all.
You can figure your allowable PMI deduction using the work sheet in the Schedule A instructions.
Don't deduct a telephone landline, but ...
You can't deduct the cost of your main home telephone landline, even if you primarily use that phone for your business. The IRS says that the first hard-wired phone line in your home is considered a nondeductible personal expense.
But you can deduct as a business expense the cost of business-related long-distance charges on that phone.
If you are an employee, they would be claimed as an unreimbursed business expense on Schedule A.
If you are self-employed, you would count the phone calls as an expense on your Schedule C or C-EZ.
And if you install a second telephone landline specifically for your business, its full cost is deductible.
Don't deduct commuting costs, but ...
The cost of getting to and from your workplace is never deductible. Taking public transportation or driving to work is a personal expense, regardless of how far your home is from your office.
And no, you can't deduct commuting expenses even if you work during the commute.
But you might be able to deduct some commuting costs if you work at two places in one day, whether or not for the same employer. In this case, you can deduct the expense of getting from one workplace to the other.
You also can deduct some expenses related to other work-related travel, such as visits to clients (current and potential) and out-of-office business meetings.
If you're self-employed, these expenses would go on your Schedule C or C-EZ.