Tax Time: Can you really deduct that?

By: Staff

4 Min Quiz

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About This Quiz

Before you get too "creative" with your income tax deductions, take our quiz to see what's kosher and what will land you in the "audit" pile at the U.S. IRS.

If you are blind, deaf or otherwise disabled, you can deduct the expenses related to a service animal like a guide dog. But what about nontraditional service animals like monkeys or parrots?

The IRS explicitly says that taxpayers can deduct all expenses related to a dog or "other service animal."


Speaking of dogs, which of the following dog "jobs" is considered a deductible business expense?

Don't try to claim the family pet as a business expense. Guard dogs, farm dogs and show dogs must be exclusively "working" dogs for their expenses to qualify as deductible.


The IRS lets you deduct moving expenses when relocating for a new job, but how far do you have to move to qualify as a "relocation"?

This is a complicated one, but what else do you expect from the IRS? If your old commute from home to work was 30 miles (48 kilometers), then your new workplace needs to be 80 miles (129 kilometers) from your old house to qualify for deductible moving expenses.


Can you deduct moving expenses related to a new job even if you get fired from that job after two weeks?

The IRS lets you deduct moving expenses even if you get fired from the original job as long as you get a new job in the same area and remain employed for at least 39 out of the 52 weeks in the tax year.


The IRS allows you to deduct the cost of gas while relocating for a job. What was the rate for 2013?

Hybrid drivers rejoice! The IRS allows you to deduct 24 cents per mile.


Most of us know that donations to charitable organizations are tax deductible, but what about volunteer work? Can you deduct the cost of the flour and sugar you used to bake cookies for a church fundraiser?

Any expenses related to volunteer work with a charitable organization are tax deductible, even those baking raw materials.


Can you deduct the cost of hiring a babysitter to watch your kids while you volunteer with a charitable organization?

Again, any expense related to volunteer work — including child care — is deductible. Way to go, IRS!


Does your entire home count as a "home office" if you have a home-based business?

The IRS defines a "home office" as the "portion of a residence ... exclusively used on a regular basis for business purposes." We don't know what you're doing in the bathroom, but odds are it's not "exclusively" business.


To make home office deductions less complicated, the IRS introduced a "simplified option" for tax year 2013. How much does the IRS allow taxpayers to deduct for home offices up to 300 square feet (28 square meters)?

Instead of calculating the exact percentage to deduct from rent, utilities, Internet service, etc., taxpayers only have to get out the tape measure and multiply by five.


Can you deduct the expenses related to a small side business like selling homemade soap at a farmer's market, even if you don't make a profit?

The IRS allows you to deduct expenses on all businesses, no matter how small or unprofitable, on Schedule C. However, if your business fails to make a profit for three out of five tax years, the IRS might question whether you have a "reasonable expectation" of making a profit, or if you're trying to hide income in a tax shelter.


Can you deduct the money you spend on gas getting to and from work on your daily commute?

Ain't the IRS a stinker? The only travel expenses that are deductible are for trips away from your regular place of business.


The IRS allows you to deduct the cost of medical expenses in excess of 7.5 percent of your adjusted gross income (AGI). Which of the following qualifies as a medical expense?

As long as you have a doctor's note, the IRS will allow you to deduct just about any expense related to you or a dependent family member's medical condition. Note that you can only deduct the cost of medical expenses in excess of 7.5 percent of your AGI, though.


Can you deduct the cost of driving to interviews and printing out resumes to find a new job?

It turns out that you can deduct job-hunting expenses exceeding 2 percent of your adjusted gross income if you were laid off. If it's your first job ever, no dice.


Can a college student deduct the interest paid on a student loan even if his parents are the ones paying back the loan?

Technically, the student is the one liable for repaying the loan, so he can deduct the interest as long as he's not claimed as a dependent on his parents' tax return. Parents, unfortunately, cannot deduct the interest.


The IRS allows you to deduct state and local taxes paid from your taxable income on federal tax returns. But what if you live in a state that doesn't collect state or local taxes? What else can you deduct?

Folks who live in states without state or local taxes can deduct their sales taxes instead. In fact, anyone in any state can choose to deduct sales taxes if they are higher than state and local taxes.


Which of the following is NOT on the IRS list of miscellaneous work-related expenses?

Although it didn't make the IRS list, an exotic dancer named "Chesty Love" was allowed by a tax court to write off a breast augmentation as "stage props."


True or false: Self-employed taxpayers can deduct the cost of health insurance premiums, even if they don't itemize their deductions.

Self-employed workers pay higher insurance premiums than folks who receive coverage through work. The IRS cuts them a break by allowing them to deduct those expenses, even if the total cost doesn't exceed 7.5 percent of adjusted gross income.


If you are a teacher's aide in an elementary school, can you deduct the cost of buying extra colored pencils and construction paper for your students?

If you work in a school (teacher, principal, counselor, aide), you can deduct up to $250 in unreimbursed "educator expenses," even if you don't itemize.


The IRS offers up to $4,000 in tuition deductions for folks who are paying for college. If you are paying your live-in boyfriend's college tuition, can you qualify for the deduction?

If you pay for more than half of your boyfriend's living expenses, then he qualifies as your dependent, in which case you can claim the tuition deduction on your return. Even with the tax break, though, you might want to reconsider the relationship.


The IRS allows you to deduct certain expenses related to investments. Which of the following is NOT deductible?

You can't deduct trade commission fees. However, if you lose a lot of money through bad investments, it can offset your capital gains. Not that we recommend it.


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