This document discusses potential tax deductions that taxpayers may incorrectly think are allowed but are not. It provides 8 examples of non-deductible expenses, such as pledges to charities, political contributions, volunteer work, home improvements for non-business purposes, most closing costs for home purchases, broker's fees for IRAs or investments, and additional miscellaneous expenses outlined on their website. The document encourages readers to verify deductions with their accountant and refers them to the accounting firm's website and social media pages for more information on non-deductible expenses.

1. Is your glass half empty?
Payments that you may think are deductible but aren’t!
5788 Merrick Road, Massapequa, NY 11758 • (516) 541.6549 • info@dsjcpa.com

2.  With tax season on the horizon, you may have
begun your search for that elusive golden fleece
of tax deductions – the write off that no one else
has, as of yet thought of. Of course, you have
already interrogated your accountant who most
certainly is hiding unused deductions in the
bottom left drawer of his desk just waiting for
you to ask.
 As most of our articles have focused on what is
actually deductible, we will instead turn our
attention to items that you may intuitively think
are deductible, but aren’t – so let’s begin our
glass half-empty discussion.

3. 1. Pledges
 As far as charitable contributions are concerned, you are allowed to deduct
money that you actually gave, not what you promised to give (i.e. a
pledge). For example, if you agree at a July fundraising event to annually
donate $1,000 to a qualified charity with bi-monthly payroll withholdings, you
can only deduct the portion that was actually withheld in 2015. The
remainder would be claimed on your 2016 return, the year when such
amounts are withheld.

4. 2. Quid Pro Quo Contributions
 In general, quid pro quo means something given in return for something
else. In the context of charitable contributions, a quid pro quo
contribution is a payment made by a donor to a charity as a contribution as
well as in exchange for goods or services received from the charity. A
charitable organization must provide a written disclosure statement to donors
of a quid pro quo contribution in excess of $75. If you attend a church
function whereby you give $150 and receive a dinner valued at $80, you have
made a quid pro quo contribution, of which you may only deduct $70. Even
though the deductible portion does not exceed $75, a disclosure statement
must be provided to you since your payment exceeds $75.

5. 3. Political Contributions
 While it may be great that you support your local congressman and that his
election would benefit society, those donations are not tax deductible,
regardless of whether you give money to a specific candidate, or a group
working on a candidate’s behalf.

6. 4. Work as a Volunteer
 It is honorable that you spent countless hours each week last fall to coach
your son’s football team, teaching twenty 9 year olds the fundamentals of the
sport, while simultaneously appeasing thirty-eight parents (you and your
spouse not included). As an accountant, you may even have volunteered for
the thankless job of keeping the football club’s books and acting as its
treasurer. Or perhaps you are a carpenter who built the field snack stand
with materials provided by the club. The fact remains that you cannot
deduct the value of your time on your taxes. You can, however, deduct out of
pocket expenses you incur in connection with performing these tasks for such
things as supplies and travel to do that work.

7. 5. Home Improvements
 You may have spent your hard earned money making your home into a
palace. But unless you use a portion of your home primarily for business such
as a rental apartment, home office or inventory storage, you cannot deduct
the cost of such expenditures. You may, however, be able to reduce the gain
on a future sale of your home, so keep a file of those receipts for possible
future use.

8. 6. Closing Costs to Purchase a Home
 Most closing costs paid in connection with the purchase of a home, with the
exception of mortgage points and property taxes paid at closing, are not
deductible. This includes escrows for such items as property taxes and
insurance. They are instead added to the cost basis of your home to
determine any future gain on its sale, so keep your closing statement in a safe
place. In the case of property tax escrows, future disbursements made by the
bank on your behalf from your escrow account are deductible in the year paid
for those that itemize on their returns.

9. 7. Broker’s Commissions for IRA or
Other Investment Property
 Fees and commissions paid to execute transactions are not currently
deductible but are instead added to the cost of the respective security. This
lowers the gain or increases the loss realized on a future sale of the
stock. Periodic advisory and investment management advisory fees charged
to your portfolio account may be deductible as a miscellaneous deduction to
the extent that the aggregate of your miscellaneous deductions exceeds 2% of
your adjusted gross income.

10. 8. Additional Non-Deductible Expenses
 For the list of some additional expenses that you generally cannot deduct on
your personal return, visit www.dsjcpa.com/non-deductible-expenses.

11. www.facebook.com/dsjcpa
http://bit.ly/DSJCPA-LI
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