IRS Taxes: Deduct This, Not That

Looking sharp at work rests totally on your shoulders. A recent U.S. Tax Court ruling reaffirmed this tax law when the judge disallowed a television anchorwoman's deductions for tens of thousands of dollars in clothing she bought to wear on air.

But you can deduct the cost of dry cleaning or laundry of business uniforms. Under the tax code, that means attire you can't wear anywhere else, although with the ways some folks dress today, that designation could be hard to nail down.

When an outfit is "not suitable for everyday use," the IRS says the costs of upkeep for the apparel can be claimed as an unreimbursed business expense on Schedule A.

Also deductible are the cleaning charges for nonprofit uniforms, for example, an outfit required of hospital volunteers or Boy Scout or Girl Scout troop leaders. Here the costs of the uniform and its maintenance would count as charitable deductions, also claimed on Schedule A.

Don't deduct volunteer time, but ...

Your time is valuable, but that doesn't matter to the IRS when it comes to volunteering at a charity.

You can't claim the value of your wages for the hours spent helping out at your favorite nonprofit. Neither can you count as a deduction the value of a project you created, such as a poster that you, a graphic artist, designed for the charity.

But you can deduct other costs associated with your charity work. This includes your mileage in connection with the group's work, which can be claimed on Schedule A at the rate of 14 cents per mile.

You also can claim as a charitable deduction unreimbursed out-of-pocket expenses.

As with all things tax, keep good records. Track your charitable travel and hang on to the receipts for the poster board and special markers you bought just for the nonprofit's poster project.

Don't deduct OTC medication, but ...

Headache and cold treatments from your neighborhood pharmacy shelves have never been tax-deductible. There was some confusion here because for a while, the IRS allowed owners of medical flexible spending accounts, or FSAs, to use money in those pretax accounts to pay for over-the-counter drugs.

That option ended when 2011 began. Now you must get a doctor's prescription for OTC medications before the purchase can be reimbursed with FSA funds.

But you still can deduct diagnostic tests, such as store-bought tests for pregnancy and diabetic blood sugar levels.

And the IRS says moms get a tax deduction on breast-feeding supplies, including pumps and bottles, because, like obstetric care, "they are for the purpose of affecting a structure or function of the body of the lactating woman."

Don't deduct overnight camp, but ...

When school lets out for the summer, working parents face a child care dilemma: what to do with the youngsters while Mom and Dad are at the office.

Some families send the kids off to summer camp. That's a great experience for the kiddos and eases, at least temporarily, parental child care concerns.

But sleep-away camps, in the summer or any other time of the year, are not tax deductible.

However, if you decide instead to keep the kids at home and simply send them to day camp during the hours you're working, that expense could qualify as a claim for the child and dependent care credit.

If your care costs are for one child, you can count up to $3,000 of care expenses each year toward the credit. The expense amount is doubled for the cost of caring for two or more dependents.

Your actual tax credit can be up to 35 percent of your qualifying expenses, depending upon your income. And while that might not seem like a large percentage, remember that since it's a credit, you get to use it to offset your tax bill dollar for dollar.

READ THIS AND OTHER TAX STORIES ON BANKRATE.COM

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