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Common Myths About IRS Tax Deductions | Layton & Stacey Smith
You think you know everything about tax deductions? Well, think again, because you don’t.
In this episode, we’re going to debunk the most common myths about IRS tax deductions. Join us in your favorite cigar lounge and listen to this first installment of the series.
All Expenses Are Deductible
Personal expenses such as utility bills and credit cards are not deductible on individual 1040 tax returns.
Most often extra expenses such as utility bills are deductible on business tax returns. This is known as home office expense.
We provide examples of the type of expenses you can deduct on individual and business tax returns.
You Must Itemize Deductions
You don’t always have to itemize your deductions.
Look at your Schedule 1 to see what deductions you have to itemize.
Something else to keep in mind is that standard deductions are not always more than the itemized deductions.
Home Office Deductions Are Not Worth It
Many people believe that home office deductions are worthless due to the amount and high audited risk.
Home office deductions do put you at a higher risk of being audited, however they’re still worth deducting.
Layton provides an example of when you should include home office expenses.
You Can Only Claim Deductions if You Have Receipts
There are other ways to claim deductions if you don’t have receipts:
Cancel Checks
Invoices
Bank Statements
Credit Card Statements
Written Records
Photographs
Medical Statements
Deductions Are the Same As Credits
No deductions and credits are not the same.
Deductions vs. credits: here’s how to remember:
Deductions reduce your taxable income.
Credits reduce your tax liability.
Sometimes credits can be more beneficial than deductions
“A dentist may have given you a statement, you can use that to deduct a medical expense.” - Stacey Hoffman Smith
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By Layton Smith and Stacey Hoffler SmithYou think you know everything about tax deductions? Well, think again, because you don’t.
In this episode, we’re going to debunk the most common myths about IRS tax deductions. Join us in your favorite cigar lounge and listen to this first installment of the series.
All Expenses Are Deductible
Personal expenses such as utility bills and credit cards are not deductible on individual 1040 tax returns.
Most often extra expenses such as utility bills are deductible on business tax returns. This is known as home office expense.
We provide examples of the type of expenses you can deduct on individual and business tax returns.
You Must Itemize Deductions
You don’t always have to itemize your deductions.
Look at your Schedule 1 to see what deductions you have to itemize.
Something else to keep in mind is that standard deductions are not always more than the itemized deductions.
Home Office Deductions Are Not Worth It
Many people believe that home office deductions are worthless due to the amount and high audited risk.
Home office deductions do put you at a higher risk of being audited, however they’re still worth deducting.
Layton provides an example of when you should include home office expenses.
You Can Only Claim Deductions if You Have Receipts
There are other ways to claim deductions if you don’t have receipts:
Cancel Checks
Invoices
Bank Statements
Credit Card Statements
Written Records
Photographs
Medical Statements
Deductions Are the Same As Credits
No deductions and credits are not the same.
Deductions vs. credits: here’s how to remember:
Deductions reduce your taxable income.
Credits reduce your tax liability.
Sometimes credits can be more beneficial than deductions
“A dentist may have given you a statement, you can use that to deduct a medical expense.” - Stacey Hoffman Smith