Thursday, November 6, 2008

Non-Deductible Taxes

Taxpayers are often confused about the deductibility of taxes. Which taxes can be deducted and which can’t are some of the questions frequently asked. Generally the following taxes are considered non-deductible under current tax laws:
Fines and penalties
Estate or inheritance taxes
Transfer taxes
Federal excise taxes
Federal income taxes
Trash or pickup fees
Homeowner’s association fees
Rent increase due to higher real estate taxes
Social Security and other employment taxes for household workers
Employee contribution to private or voluntary disability plans
Taxes for local benefits (i.e. property improvements)
Gift taxes

Hopefully this list will help taxpayers make the determination as to the best action to take when making the decision as to listing a specific tax as a deduction. Taxpayers are encouraged to take full advantage of every provision in the tax code to ensure they do not overpay their tax obligation. Likewise taxpayers face big fines and penalties if non-deductible taxes are listed and are subsequently disallowed. If you do have a tax problem related to an audit you should call a tax professional.

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