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Deduction Do’s and Dont’s.

January 20, 2011

It’s that time of year again where we all rip apart our houses looking for that shoe box of receipts to take to our tax guy or gal here at GAI. Everyone wants to save money but before you go deducting everything, make sure it is accepted by the IRS instead of sending a red audit flag. It’s totally okay to think outside the box too when listing your itemized business or personal deductions. Here are some quick facts to take into account for some of the basic and not so basic tax deductions out there.  

  • Home Office -Office supplies and expenses are deductible. The amount you can deduct  is generally dependant on  what percentage of your home is used for your business. The IRS can limit certain deductions if your gross income is less than your total business expenses. So be sure to list all office supplies, utilities and advertising expenses.The toilet paper you purchased from Costco to use in the entire house is definitely not deductible.
  •  Travel and Entertainment-Taking clients out for dinner on your own turf is 50% deductible as long as you are prepared to tell the IRS what business was discussed during the dinner. While traveling to conferences it’s 100% deductible. Talking about your business plans with mom, dad and the kids at Peter Luger however doesn’t qualify.
  • Medical Reasons-You can claim that the pool or jacuzzi you installed was for medical reasons but be prepared to prove it (with a reputable doctors note of course). While it can be a legitimate expense the  underwater speakers, mood lighting and in-tub stereo will get you automatically denied.
  • Pets– While we all would love to claim the money we spend on food, clothing (hello the winter is rough here people), beds and medications, sadly it can not be. To me, pets are like kids so why not? Until that law gets passed there is one way you can use pets as a deduction. Guard cats and dogs. You can deduct the food you purchase to feed the animals that guard your place of business. This mostly applies to junk yards not to the pigeons outside your hardware store.

To find out more details about the deductions listed above or to just talk tax, give us a call at 212-979-6830. At GAI (www.gunwel.com) we are happy to help you make sure you get the most out of your tax return. Stop by and remember we are open Monday through Saturday 8am-8pm! See you soon!!

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