Julie Younglove's blog

8 Things You Think Are Tax Deductible That Aren't

There’s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don’t qualify under IRS guidelines. Here are a few items that can lead to unpleasant surprises in case of an audit.

1. Business-related Entertainment

You may be taking clients out to win their business, but you’re probably having a little fun as well. At least, the IRS assumes you are. It allows you to deduct only 50 percent of the cost of entertaining customers or clients, and for record-keeping purposes it’s best to document who you entertained and what the specific business goal of the event was. If not, you risk having the deduction disallowed in an audit.