Checklist of Nondeductible Items for Tax Returns

Unfortunately, not everything you spend your money on gives rise to a tax deduction. Most of your personal expenses, such as food, clothing, and recreation, are nondeductible items. The tax law also specifically bans certain write-offs. Of course, in some cases, while a deduction may be banned as a general rule, there may be circumstances under which it becomes deductible (check out Deductions & Credits for more information).

The IRS has identified a number of scams (the IRS calls them the "Dirty Dozen") in which sharp promoters incorrectly advise taxpayers to claim certain types of write-offs. Here are some types of write-offs that the IRS has over the years cautioned taxpayers against claiming:

  • Abusive Roth IRAs. Promoters encourage individuals to shift undervalued property to a Roth IRA as a way to avoid the annual contribution limit and let gains on such property go untaxed. Only cash contributions can be made to a Roth IRA.
  • Trust deductions for personal expenses. Promoters tell taxpayers to transfer their assets to trusts and have the trusts deduct the cost of food, clothing and other personal expenses. Personal expenses are not deductible.
  • "No gain realized" deduction. Like the claim of right doctrine, promoters tell taxpayers to claim a miscellaneous itemized deduction on Schedule A equal to their adjusted gross income. There is no such deduction.
  • Zero returns. Promoters instruct taxpayers to enter all zeros on the return (rather than reporting their actual income items). Income must be reported unless there is a specific tax rule for exemption or exclusion.
  • Slavery reparations. Promoters suggest that African-Americans can claim a deduction or credit for reparations. There are no such reparations and no such allowable deduction or credit.
  • Home-based businesses. While there is a deduction allowed for legitimate home-based businesses, promoters tell taxpayers to fictitiously create a business run from home so that a deduction will be allowed. Fake businesses do not support real deductions.
  • Shared earned income credits. Promoters tell taxpayers that they can "share" dependents in order for multiple taxpayers to claim the earned income credit with respect to the same dependents. Only eligible taxpayers can claim the earned income credit and only one credit is allowed for each dependent.

Here is a listing of other items you may not deduct.

  • At risk, losses in excess of at risk investment(s).
  • Attorney's fees on buying a home
  • Bank fees, such as monthly checking fees on a personal account
  • Bar examination fees
  • Blood donations
  • Bribes
  • Burial fees
  • Car expenses for personal use of the car
  • Child support payments
  • Club dues for recreational, social, and athletic clubs
  • Commuting expenses
  • Compensation to housekeepers and other domestic employees
  • Cosmetic surgery
  • Country club membership
  • Credit card interest incurred for personal expenditures
  • Debts belonging to another person that you pay
  • Demolition costs
  • Disability insurance premiums
  • Education costs for your child's primary and secondary school
  • Elective deferrals to 401(k) and similar plans
  • Estimated tax penalties
  • Expenses of earning tax-exempt income
  • Federal income tax
  • Fifty percent of meal and entertainment costs for business
  • Fines
  • Funeral expenses
  • Gambling losses in excess of winnings
  • Gift tax
  • Gifts you make to family and friends
  • Health spa expenses
  • Hobby losses in excess of hobby income
  • Interest on loans to buy or carry tax-exempt securities
  • Investment seminars
  • IRA contributions by participants with AGI over set limits
  • Job-hunting costs for a first job
  • Kickbacks
  • Life insurance premiums
  • Lobbying expenses (other than in-house expenses up to $2,000)
  • Losses from the sale of your home, furniture, car, and other personal items
  • Losses on sales to related parties
  • Lost or misplaced cash or property
  • Lunches with coworkers
  • Over-the-counter medications
  • Partially worthless securities
  • Passive activity losses in excess of passive activity income
  • Penalties
  • Personal disability insurance premiums
  • Personal interest (such as credit card interest)
  • Personal living expenses (such as food, clothing, rent, and utilities)
  • Points paid to refinance a home mortgage
  • Political contributions
  • Professional accreditation fees
  • Property settlements when dissolving a marriage
  • Reimbursed expenses you receive under an accountable plan
  • Repairs to your home or personal car
  • Repayment of loans
  • Rollover contributions
  • Roth IRA contributions
  • Sales tax
  • Social Security and Medicare (FICA) taxes
  • Spousal travel costs
  • State inheritance taxes
  • Stockholder meetings, expenses of attending
  • Tax penalties
  • Telephone line (basic service charges of first residential line to home)
  • Title insurance
  • Toiletries
  • Travel as a form of education
  • Voluntary alimony payments
  • Voluntary unemployment benefit fund contributions
  • Wash sale losses