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Deductions – What not to do.

No one likes paying a lot of taxes, and savvy taxpayers will claim as many deductions as they can to reduce their bill. But some people get carried away and try to claim expenses that are not allowed.

If you try to claim illegitimate write-offs (I won’t allow you to do this, but others do) you could end up getting audited and owing more taxes, as well as penalties and interest. To help you avoid that, I’ve put together a list of expenses you might be tempted to claim but can’t.

1. Home insurance (unless it’s mortgage insurance) If you meet certain IRS guidelines, however, you can deduct private mortgage insurance, or PMI, on your 2018 tax return. PMI is insurance your mortgage lender requires you to buy if you pay down less than 20 percent. The PMI payment is tacked on to your mortgage payment. Until you get at least 20 percent equity, you have to pay PMI.

2. Landlines and cellphones (unless business-related) If you still have a landline telephone at home, you can’t deduct the cost, even if you primarily use that phone for business. The IRS says 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. And if you have a second landline phone specifically for business, its full cost is deductible.

Cellphones are a legitimate, deductible expense if you’re self-employed and use the phone for business. It’s recommended you get an itemized bill, though, to prove it.

However, the “unreimbursed business expense” deduction for using a personal cellphone for work has been eliminated. And if your employer provides you with a cellphone as part of your job, this could increase your taxable income.

3. Commuting costs

The cost of getting to and from work is not deductible. Taking a bus, trolley, subway or taxi, or driving your own vehicle to work is a personal expense, regardless of how far you have to travel.

4. Plastic surgery (unless medically necessary)

Face-lifts, liposuction, electrolysis and other procedures done to enhance your appearance are not deductible medical expenses.

But if, for instance, you have a nose job to treat respiratory problems, the doctor’s decision makes it a medical deduction.

5. Cost of work wardrobe (unless it’s a uniform)

Looking sharp at work rests totally on your shoulders. A U.S. Tax Court ruling in 2011 reaffirmed this tax law when the judge disallowed a television anchorwoman to deduct 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, which, under the tax code, is attire you can’t wear anywhere else other than work.

6. Volunteer work (unless you rack up mileage)

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 monetary value of the hours you spent volunteering at your favorite nonprofit. Neither can you deduct the value of a project you created for the charity, such as a poster.

But you can deduct other costs associated with your charity work. This includes the miles you drive doing the charity’s work, which can be claimed at the rate of 14 cents per mile. Keep good records on your charity travel mileage.

You also can claim as a charitable deduction unreimbursed out-of-pocket expenses. Hang on to the receipts for the poster board and special markers you bought just for the nonprofit’s poster project.

7. Over-the-counter medicines (unless a doctor prescribes)

Headache and cold treatments from your neighborhood pharmacy have never been tax-deductible. There was some confusion for a while because the IRS used to allow people with a medical flexible spending account, or FSA, to use the pretax money in that account to pay for over-the-counter drugs.

That option ended in 2011. Now, you must get a doctor’s prescription for over-the-counter meds before the purchase can be reimbursed with FSA funds.

8. Summer camp for the kids (unless it’s day camp)

When school lets out for the summer, working parents fret over what to do with the children while they are at work.

Some families send the kids off to camp. That’s a great experience for the kids and eases child-care concerns for a time.

But sleep-away camps are not tax-deductible.

However, if you decide instead to keep the kids at home and send them to day camp during the hours you’re working or looking for a job, that expense could qualify for the child- and dependent-care credit.

For one child, you can count up to $3,000 of care expenses toward the credit for 2018. If you paid for the care of two or more dependents, the credit limit is $6,000.

Please call or email us for more information and questions.

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Jocelyn Sihathep (Jo1)

Office Manager

We have a Sun Devil in the house! We are honored to add to our team, Jo. She is a graduate of Arizona State University (Fear the Fork) and is looking to broaden her knowledge and understanding of business and accounting.

She is the engine of our fine-tuned machine. Her “can do” attitude, commitment to customer service and outstanding organization skills allows us to focus on what matters most, our clients. She is amazing with technology and strives for excellence. She embraces the entrepreneurial spirit and is a great asset to our team.

Jocelyn Weatherley (Jo2)

Accountant

Jo was previously an accountant for a $60M company and their 13 subsidiaries. She is in charge of our accounting and bookkeeping department and serves our clients on their time schedule. Whether it is weekly, monthly or quarterly she helps provide reliable, useful and accurate information to our clients on their terms.

Jo performs full accrual accounting and is responsible for reconciling all accounts, journal entries, month end closing procedures and preparation of internal financial statements and analytics. She also assists in the preparation of sales and payroll tax returns. She holds a wide range of knowledge, from QuickBooks to travel (she spent most of her life in the UK), she’s your girl. She is excited to join the CCA team and ready to conquer tax season head on!

Dixie Cary

CPA and Tax Manager

Dixie is a Minnesota CPA and experienced accountant. She has over 25 years of accounting in both audit and tax, but her passion is tax. After years in the cold, she decided to leave the mid west and find a new home in Sunny Arizona. We are so happy that Dixie has joined our team.

Dixie leads and manages our entire tax department. She assists and leads a team through our busiest times while delivering quality, complete and accurate tax services for our clients. She is proficient in preparation, planning, and education of federal and state income taxes for individuals, businesses, estates, trusts, and exempt organizations.

Theresa Elaine Valade

CPA and Managing Partner
Theresa has over 27 years of experience in tax, audit and consulting. She was with the International CPA Firm of Arthur Anderson in Phoenix and San Francisco. She most recently was a partner with Moffitt & Company, P.C. Her areas of specialization are business consulting and advisory, audits, income tax planning and preparation, and IRS audit representation. Her industries of specialization are nonprofits, real estate, hospitality, franchises, mortgage banking and brokering, title insurance, escrow, health, and beauty.
One of Theresa’s biggest honors is being named the 2020 CPA firm of the year for her commitment and service to her clients during the challenges imposed by the COVID-19 pandemic. Putting passion and personalization at the forefront Theresa has led her firm to excellence by not only providing measurable results for clients but making them feel well taken care of during times of great uncertainty.
Theresa is also a member of the prestigious, Arizona Society of CPAs, ASCPA, 100% Membership Club. It is an honor to be part of this club that exhibit’s a high level of commitment to the Arizona Society of CPAs. We are privileged to be able to convey to our clients, staff, and colleagues of Theresa’s significant commitment to the CPA profession.