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15 Things You Think Are Tax-Deductible That Aren't

Benjamin Franklin said that there are only two certainties in life: death and taxes. This tax season, we’re not sure which one proves more menacing. At BELAY, our vision is to help you achieve your vision (which is probably not to get audited this year), so here are 15 things you may think are tax-deductible that actually aren't.

While this is likely not your first tax rodeo, it may be your first time filing after the implementation of the Tax Cuts and Jobs Act of 2017, which changed the United States' tax code – considerably. The new law affects every income tax return filed from 2018 to 2025, so while you may have thought you knew your way around a deduction before, the game has since changed – and you may not even know all the rules yet.

So in an effort to avoid drawing the ire of the IRS, read on to learn about 15 things that were once deductions – or things you thought were deductions – that now don’t qualify under IRS guidelines.

1. Personal exemptions

You can’t claim a deduction for yourself, your spouse or any of your dependents – and the loss of this deduction significantly reduces the tax benefit of the increased standard deduction.

2. Business expenses

Business meals, travel and entertainment are no longer deductible, including using your car for business, job-related education, job-seeking costs, a qualified home office, union and professional dues and assessments, work clothes and work supplies.

3. Alimony

Alimony that's required by divorce, separation decrees or agreements is not deductible. However, taxpayers who are divorced before December 31, 2018, will continue to deduct or report alimony payments.

Employee payments of moving expenses – who are not active-duty military moving due to a military order – are now included in taxable wages, tips and other compensation reported on a W-2.

5. Home equity loan interest

Home equity interest is not deductible, including existing home equity debt that is not previously grandfathered. As such, it is recommended that homeowners keep track of acquisition and home equity debt dating back to the original purchase of the home.

6. Unqualified Charities

Not all nonprofits are tax-deductible, including some social welfare and civic organizations. Further, you can’t deduct a donation that provides something you benefit from, like a dinner in exchange for a donation.

7. Pledges

If you agree to donate a set amount annually to a charity through payroll deductions in an August fundraising drive, you can deduct only the amount you paid between August and December.

8. Casualty Losses

A deduction for personal casualty loss from a disaster is only allowed for property damaged in areas which are under a presidential declaration as a disaster area.

9. Undocumented cash donations

The IRS expects you to document all donations made to charity – and can disallow them in an audit if you can’t – so casually tossing some money into a collection plate at church may be a dicey deduction.

10. Investment expenses

Custodial and maintenance fees for investment and retirement accounts, fees for collecting dividends and interest, fees paid to investment advisers, the cost of investment media and services, and safe deposit box rental fees are no longer deductible.

11. Political contributions**

If you donate to a candidate or a group working on a candidate’s behalf, you can't deduct that money from your taxes.

12. Tax preparation fees

Expenses paid to a tax professional for the determination, collection, or refund of any tax are no longer deductible, regardless of what level of government is presiding over the taxation or what the tax is levied on.

13. Volunteer time

If you’re, let’s say, a digital marketer and you donate your time to your church to help them rebrand, you can’t deduct that time at your hourly rate. You can, however, deduct any supplies you used to volunteer.

Legal fees related to certain taxable awards, judgments or settlements are no longer deductible, so if you are awarded a settlement of $100 and your attorney receives $30 of it, you must still pay federal income tax on the entire $100 – not $70.

15. Colleges donations

Much like other charitable donations, if you receive tickets to athletic events in exchange for a donation to a college, you must now reduce the amount of your charitable donation deduction by the value of any tickets you received.

Well, if you’re still with us after all that exciting and uplifting information, here’s a meme to make you smile!

While we’re sure that learning about parallelograms has helped you tremendously during parallelogram season, learning how to file taxes may have also come in handy. So if you’re self-employed and more adept at identifying the vertices on a quadrilateral than you are at identifying qualifying deductions, consider letting one of the professional bookkeepers at BELAY help. Let them do what they do best so that you can focus on what you do best for your company.