Year round we get calls and emails from clients and perspective clients alike, many times with what is intended to be a simple tax question. “If I do this thing, can I write it off” is a very common one. Trouble is, there are NO simple tax answers – because everything is subject to your individual facts and circumstances. The most accurate answer to any tax question is ‘maybe’.
A prime example is medical expenses. My spouse is diabetic and we pay more than $100.00 a month in insulin, can we write that off on our tax return? The easy answer is yes. However, even though it can be a medical deduction it has a very high chance to not changing their tax return by even $1.00 due to the income limitation and standard deduction. ‘Wait that doesn’t make sense, if I can write it off then how come it doesn’t help me?’ That is precisely the reason why there are no simple tax answers. Please look to a this post for more on medical deductions.
It is not only your own facts and circumstances, but the whole picture of your tax return. It is entirely possible something is a ‘write off’ for someone else and not for you. If I have a business selling homemade cookies on the street corner every weekend, and I present you with deductions for airfare… is that a write off? Well it depends. What was the airfare for? A cooking convention in Florida that went for 2 days and you were there for 2 days? Then very likely it would be. A cooking convention very close to Disney and the convention was for 1 day and you were there for 12… it was clearly not 100% business. The question of ‘can I write of airfare for my business’ is a simple question, but no answer can truly be given without more information.
This applies to work and business deductions, donations to charity, paying for college, student loans, gambling losses, miles driven in your car for work, inheritance, and many other things. Many things are limited by level of income. Others by total deductions, that is also another long list. As tax professionals, we truly want to give you more than a yes or no answer. However, giving you a simple yes or no could be a disservice to you as a valued client if your personal tax situation could result in either answer being insufficient to your circumstances. We need a copy of your last year’s tax return, and permission to use it, to be as accurate as we can.
In the end, please don’t be frustrated or upset when it is difficult to find, or get a straight answer about your simple tax question. Your tax answer revolves around your family’s taxes, not someone else’s taxes.
Senior Tax Professional