APPENDIX C Checklist of Nondeductible Items

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 (so check throughout the book for exceptions to the general rule).

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 situations that the IRS has over the years cautioned taxpayers against:

  • Pervasive telephone scams. Callers pretend to be from the IRS in order to steal money or identities. If you know you don't owe money (i.e., you never received a bill from the IRS), don't respond. Instead, call the Treasury Inspector General for Tax Administration at 800-366-4484 to report the call.

  • Phishing. Scammers purporting to be from the IRS send e-mails seeking to obtain personal information used for identity theft. The IRS never contacts taxpayers by e-mail without prior notice of the communication; the IRS already has taxpayers' personal information.

  • Identity theft. This has topped the list of scams in the past several years, despite considerable IRS efforts to thwart it where taxes are concerned. Thieves are looking for ways ...

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