Publication 529 |
2001 Tax Year |
Nondeductible Expenses
You cannot deduct the following expenses.
List of Expenses
- Adoption expenses.
- Broker's commissions that you paid in connection with your
IRA or other investment property.
- Burial or funeral expenses, including the cost of a cemetery
lot.
- Campaign expenses.
- Capital expenses.
- Check-writing fees.
- Certain club dues.
- Commuting expenses.
- Fees and licenses, such as car licenses, marriage licenses,
and dog tags.
- Fines and penalties, such as parking tickets.
- Health spa expenses.
- Hobby losses--But see Hobby expenses,
earlier.
- Home repairs, insurance, and rent.
- Home security system.
- Illegal bribes and kickbacks--See
Bribes and kickbacks in
chapter 13 of Publication 535.
- Investment-related seminars.
- Life insurance premiums.
- Lobbying expenses.
- Losses from the sale of your home, furniture, personal car,
etc.
- Lost or misplaced cash or property.
- Lunches with coworkers.
- Meals while working late.
- Medical expenses as business expenses.
- Personal disability insurance premiums.
- Personal legal expenses.
- Personal, living, or family expenses.
- Political contributions.
- Professional accreditation fees.
- Professional reputation, expenses to improve.
- Relief fund contributions.
- Residential telephone line.
- Stockholders' meeting, expenses of attending.
- Tax-exempt income, expenses of earning or collecting.
- The value of wages never received or lost vacation
time.
- Travel expenses for another individual.
- Voluntary unemployment benefit fund contributions.
- Wristwatches.
Adoption Expenses
You cannot deduct the expenses of adopting a child but you may be
able to take a credit for those expenses. For details, see
Publication 968,
Tax Benefits for Adoption.
Campaign Expenses
You cannot deduct campaign expenses of a candidate for any office,
even if the candidate is running for reelection to the office. These
include qualification and registration fees for primary elections.
Legal fees.
You cannot deduct legal fees paid to defend charges that arise from
participation in a political campaign.
Capital Expenses
You cannot currently deduct amounts paid to buy property that has a
useful life substantially beyond the tax year or amounts paid to
increase the value or prolong the life of property. If you use such
property in your work, you may be able to take a depreciation
deduction. Get Publication 946.
If the property is a car used in your
work, also get Publication 463.
Check-Writing Fees on Personal Account
If you have a personal checking account, you cannot deduct fees
charged by the bank for the privilege of writing checks, even if the
account pays interest.
Club Dues
Generally, you cannot deduct the cost of membership in any club
organized for business, pleasure, recreation, or other social purpose.
This includes business, social, athletic, luncheon, sporting, airline,
and hotel clubs. For exceptions, see Dues to Chambers of Commerce
and Professional Societies under Unreimbursed Employee
Expenses, earlier.
Commuting Expenses
You cannot deduct commuting expenses (the cost of transportation
between your home and your main or regular place of work). If you haul
tools, instruments, or other items in your car to and from work, you
can deduct only the additional cost of hauling the items, such as the
rent on a trailer to carry the items.
Fines or Penalties
You cannot deduct fines or penalties you pay to a governmental unit
for violating a law. This includes an amount paid in settlement of
your actual or potential liability for a fine or penalty (civil or
criminal). Fines or penalties include parking tickets, tax penalties,
and penalties deducted from teachers' paychecks after an illegal
strike.
Health Spa Expenses
You cannot deduct health spa expenses, even if there is a job
requirement to stay in excellent physical condition, such as might be
required of a law enforcement officer.
Home Security System
You cannot deduct the cost of a home security system as a
miscellaneous deduction. However, you may be able to claim a deduction
for a home security system as a business expense if you have a home
office. See Home Office under Unreimbursed Employee
Expenses, earlier, and Publication 587.
Homeowners' Insurance Premiums
You cannot deduct premiums that you pay or that are placed in
escrow for insurance on your home, such as fire and liability or
mortgage insurance.
Investment-Related Seminars
You cannot deduct any expenses for attending a convention, seminar,
or similar meeting for investment purposes.
Life Insurance Premiums
You cannot deduct premiums you pay on your life insurance. You may
be able to deduct, as alimony, premiums you pay on life insurance
policies assigned to your former spouse. See Publication 504,
Divorced or Separated Individuals, for information on
alimony.
Lobbying Expenses
You generally cannot deduct amounts paid or incurred for lobbying
expenses. These include expenses to:
- Influence legislation,
- Participate, or intervene, in any political campaign for, or
against, any candidate for public office,
- Attempt to influence the general public, or segments of the
public, about elections, legislative matters, or referendums,
or
- Communicate directly with covered executive branch officials
in any attempt to influence the official actions or positions of those
officials.
Lobbying expenses also include any amounts paid or incurred for
research, preparation, planning, or coordination of any of these
activities.
Covered executive branch official.
A covered executive branch official, for the purpose of (4) above,
is any of the following officials.
- The President.
- The Vice President.
- Any officer or employee of the White House Office of the
Executive Office of the President, and the two most senior level
officers of each of the other agencies in the Executive Office.
- Any individual serving in a position in Level I of the
Executive Schedule under section 5312 of Title 5, United States Code,
any other individual designated by the President as having
Cabinet-level status, and any immediate deputy of one of these
individuals.
Dues used for lobbying.
If a tax-exempt organization notifies you that part of the dues or
other amounts you pay to the organization are used to pay
nondeductible lobbying expenses, you cannot deduct that part.
Exceptions.
You can deduct certain lobbying expenses if they are ordinary and
necessary expenses of carrying on your trade or business.
- You can deduct expenses for attempting to influence the
legislation of any local council or similar governing body (local
legislation). An Indian tribal government is considered a local
council or similar governing body.
- You can deduct in-house expenses for influencing legislation
or communicating directly with a covered executive branch official if
the expenses for the tax year are not more than $2,000 (not counting
overhead expenses).
- If you are a professional lobbyist, you can deduct the
expenses you incur in the trade or business of lobbying on behalf of
another person. Payments by the other person to you for lobbying
activities cannot be deducted.
Lost or Mislaid Cash or Property
You cannot deduct a loss based on the mere disappearance of money
or property. However, an accidental loss or disappearance of property
can qualify as a casualty if it results from an identifiable event
that is sudden, unexpected, or unusual. See Publication 547.
Example.
A car door is accidentally slammed on your hand, breaking the
setting of your diamond ring. The diamond falls from the ring and is
never found. The loss of the diamond is a casualty.
Lunches With Coworkers
You cannot deduct the expenses of lunches with coworkers, except
while traveling away from home on business. See Publication 463
for
information on deductible expenses while traveling away from home.
Meals While Working Late
You cannot deduct the cost of meals while working late. However,
you may be able to claim a deduction if the cost of the meals is a
deductible entertainment expense, or if you are traveling away from
home. See Publication 463
for information on deductible entertainment
expenses and expenses while traveling away from home.
Personal Legal Expenses
You cannot deduct personal legal expenses such as those for the
following.
- Custody of children.
- Breach of promise (to marry) suit.
- Civil or criminal charges resulting from a personal
relationship.
- Damages for personal injury.
- Preparation of a title (or defense or perfection of a
title).
- Preparation of a will.
- Property claims or property settlement in a divorce.
You cannot deduct these expenses even if a result of the legal
proceeding is the loss of income-producing property.
Political Contributions
You cannot deduct contributions made to a political candidate, a
campaign committee, or a newsletter fund. Advertisements in convention
bulletins and admissions to dinners or programs that benefit a
political party or political candidate are not deductible.
Professional Accreditation Fees
You cannot deduct professional accreditation fees such as the
following.
- Accounting certificate fees paid for the initial right to
practice accounting.
- Bar exam fees and incidental expenses in securing admission
to the bar.
- Medical and dental license fees paid to get initial
licensing.
Professional Reputation
You cannot deduct expenses of radio and TV appearances to increase
your personal prestige or establish your professional reputation.
Relief Fund Contributions
You cannot deduct contributions paid to a private plan that pays
benefits to any covered employee who cannot work because of any injury
or illness not related to the job.
Residential Telephone Service
You cannot deduct any charge (including taxes) for basic local
telephone service for the first telephone line to your residence, even
if it is used in a trade or business.
Stockholders' Meetings
You cannot deduct transportation and other expenses you pay to
attend stockholders' meetings of companies in which you own stock but
have no other interest. You cannot deduct these expenses even if you
are attending the meeting to get information that would be useful in
making further investments.
Tax-Exempt Income Expenses
You cannot deduct expenses to produce tax-exempt income. You cannot
deduct interest on a debt incurred or continued to buy or carry
tax-exempt securities.
If you have expenses to produce both taxable and tax-exempt income,
but you cannot identify the expenses that produce each type of income,
you must divide the expenses based on the amount of each type of
income to determine the amount that you can deduct.
Example.
During the year, you received taxable interest of $4,800 and
tax-exempt interest of $1,200. In earning this income, you had total
expenses of $500 during the year. You cannot identify the amount of
each expense item that is for each income item. Therefore, 80%
($4,800/$6,000) of the expense is for the taxable interest and 20%
($1,200/$6,000) is for the tax-exempt interest. You can deduct,
subject to the 2% limit, expenses of $400 (80% of $500).
Travel Expenses for Another Individual
You generally cannot deduct travel expenses you pay or incur for a
spouse, dependent, or other individual who accompanies you (or your
employee) on business travel. See Publication 463
for more information
on deductible travel expenses.
Voluntary Unemployment
Benefit Fund Contributions
You cannot deduct voluntary unemployment benefit fund contributions
you make to a union fund or a private fund. However, you can deduct
contributions as taxes if state law requires you to make them to a
state unemployment fund that covers you for the loss of wages from
unemployment caused by business conditions.
Wristwatches
You cannot deduct the cost of a wristwatch, even if there is a job
requirement that you know the correct time to properly perform your
duties.
Previous| First | Next
Publication Index | IRS-Forms Main | Home
|