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Updated on Thursday, February 27, 2020
The tax filing deadline is fast approaching, and taxpayers have limited time to reduce their 2019 tax bills. Thankfully, classic tax write-offs like contributing to your IRA are still available until April 15.
But with recent changes to the tax code, certain expenses that seem like legitimate write-offs (or had been in the past) aren’t deductible on 2019 filings. Before you dig through your proverbial box of receipts to find tax deductions, take a look at these eight surprising expenses you shouldn’t even bother with this year.
The average American spends nearly 27 minutes commuting to work every day. And that’s just one way — counting the return trip, employees may spend close to an hour just driving to and from work. But time isn’t the only cost associated with a commute. The financial cost of driving adds up.
According to research from AAA, a person who drives a small sedan 10,000 miles per year will pay $16.60 every single day to keep their car on the road. That’s over $6,000 in driving costs annually.
Despite the toll to your pocketbook, you cannot deduct commuting costs from your taxes. Employees with a flexible work schedule may be able to work from home full or part time to help lower the costs, but everyone else will have to pay with after-tax dollars.
If you are a business owner and your home is your office, you can deduct legitimate business-related travel. That includes trips to client sites or sales calls. The standard mileage rate for 2019 is 58 cents per mile. As long as business owners keep a mileage log that shows how they used their vehicle, they can claim their business travel expenses.
Unreimbursed travel expenses
Another type of commute that can’t be deducted? The miles employees put on their vehicle during work hours. While salespeople, construction workers and others who drive from site to site for work used to be able to deduct associated expenses, that is no longer the case under The Tax Cuts and Jobs Act of 2017. If you’re regularly driving for your employer, try negotiating for reimbursement instead.
With election season in full swing, you may be considering a contribution to your favorite political candidate. Unfortunately, that contribution won’t be tax deductible even though political campaigns are considered nonprofit organizations.
The fact that political contributions aren’t deductible may seem confusing. After all, some charitable contributions are deductible when you itemize your taxes. The difference between deductible and non-deductible contributions has to do with the tax status of the organizations. Political organizations, including campaigns, are organized under section 527 of the IRS tax code. Organizations that are set up for charitable, religious or educational purposes (among other ideals) are organized under section 501(c)(3) of the tax code. Contributions to those charitable organizations are deductible.
In general, you cannot deduct business entertainment from your tax return. That means bringing a valued client to a box suite for an NBA game is not a deductible expense in most cases, nor is taking employees on a hunting trip.
However, there are a few deductible forms of entertainment. Business owners can deduct the cost of a holiday party or employee event from their taxes. Additionally, expenses associated with attending professional events, business conventions and similar meetings can be deducted.
Interest from a HELOC used to pay off credit card debt
Prior to 2018, interest from home equity lines of credit (HELOCs) was deductible, but that also changed after the Tax Cuts and Jobs Act was signed into law at the end of 2017. Now, HELOC interest is only deductible if the HELOC was used to buy, build or substantially improve a home.
If you used the HELOC to pay down credit card debt, finance a child’s education or pay for another major expense, the HELOC interest isn’t deductible. If you’re thinking of itemizing your deductions, consider whether your interest qualifies. If you’re not sure, consult a tax professional.
If you took a job across the country, the expenses associated with moving are no longer deductible, even if you paid for them out of pocket. Employer-paid moving expenses are also taxed under the new tax reform.
In general, the only people who can still deduct moving expenses are active duty military members who are moving to a new permanent station.
Alimony for divorces after 2018
During a divorce, your debt and your assets get split up. In some cases, the courts order one person to pay ongoing alimony to their former spouse. Historically, the alimony payments were always deductible for the payer. But under the Tax Cuts and Jobs Act, the tax treatment of alimony depends on when the alimony agreement was executed.
If your divorce agreement was finalized before the end of 2018, alimony payments are generally deductible. The alimony tax shelter stays in place unless an alimony modification specifically eliminates the deduction for the payer.
However, newer divorcees paying alimony don’t get the benefit of a tax deduction. Individuals who entered an alimony agreement after December 31, 2018, will see a double blow to their budget. They’ll have to pay alimony and foot the tax bill for those payments, too.
Tax prep fees
Whether you pay an accountant or use tax prep software, your tax preparation costs are no longer deductible, even if you itemize your taxes. That said, business owners who pay for accountants or bookkeeping software can deduct expenses that are directly associated with operating the business. An accountant or lawyer can help you determine whether their services are deductible under the tax code.