Two Tax Deductions that Throw up a Red Flag
The last thing you want to do when filing your taxes is draw attention to your return. Unfortunately, thousands of people do this every year with the deductions that they claim. While there are quite a few legitimate deductions that you can use to your advantage, there are many others that the IRS watches closely. If you wrongfully claim these deductions, you are throwing up a red flag and simply asking for an audit.
Do you work from home? If so, a home office deduction is within your rights. But with that being said, the space that you claim needs to be regularly and exclusively used for business purposes. In other words, if your home office is also in your bedroom which doubles as a laundry room, you would be best suited forgetting about this deduction.
Year in and year out, many taxpayers try to deduct 100 percent of their car related expenses because they claim that it is used for business purposes. While this may be true, you need to be careful about how much you claim for business use. For example, if you drive 20,000 miles per year but only 5,000 are for business, you can only deduct 25 percent as an expense.
If you are unsure of which tax deductions are legitimate and which ones you should avoid, you should definitely see a professional. The two tax deductions above, as well as many others, will throw up a red flag right away. In turn, your chances of being hit with an audit greatly increase. Is that something you want to deal with just because you think you can stretch the truth to save a few dollars?
