IRS Write-Off List for Taxes
There are many expenses that you can write off on your federal tax return that will reduce the amount of tax you must pay to the Internal Revenue Service. But just because the IRS allows some taxpayers to claim a write-off does not mean everyone is eligible to do so. You must satisfy all eligibility criteria for each separate deduction before reporting it on your tax return.
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Gambling Losses
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At first glance, many taxpayers think that they can fully deduct all of their losing blackjack hands or unlucky lottery tickets. However, before you can ever take a deduction for your gambling losses, you must first report your gambling winnings as taxable income on your tax return in the same year as your deduction. Moreover, your deduction cannot exceed the winnings you report, which eliminates any possibility of saving tax in years you only have gambling losses. In addition, your gambling losses are deductible only if you are eligible to itemize.
Bad Debts
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If you make a personal loan to a friend or family member and don't get paid back, you may be able to claim a short-term capital loss for it. However, claiming the loss requires that a true creditor-debtor relationship exist. This means that the terms of the loan must be clearly stated and its repayment must not be conditional on any future events. In addition, you must be able to show the IRS that you had other motives for making the loan other than to just help out a friend. A good way to overcome this assumption is to charge your friend interest over the life of the loan. You can write off the loss in the year the debt becomes worthless, which is generally the year you realize you will never see your money again.
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Home Offices
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If you work from home because your employer doesn't provide a workspace, you may be able to write off a portion of your personal housing expenses that relate to your home office. To qualify, you must regularly and exclusively use an area of your home for business or work purposes. However, you can't claim a deduction when your office doubles as a guest bedroom. To calculate your deduction, determine the ratio of the office's square footage to the total square footage of your home. This "business percentage" is the percentage of your annual housing expenses such as rent, utilities, water, home repairs, insurance and cleaning services that you can deduct.
Job Searches
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When you are looking for work in a field that you have experience in, regardless of whether you are currently working or unemployed, you may be eligible to claim a deduction for some of the costs of searching for a job. However, you cannot write off your job search expenses if you are looking for work in a new field or entering the job market for the first time. Some of the costs you can write off include the fees you pay to recruiters and professional resume writing agencies and the cost of mailing applications and resumes.
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References
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