PERSONAL DEDUCTIONS IN 2020

Our tax code is often a confusing jumble to rules and percentages. It’s hard to tell if something is tax deductible or not without some advanced knowledge of tax. And of course, they change things up on us all the time. We at Watkins and Company have gathered a list of some of the lesser known deductions that can be taken for your 2019 taxes

Medical Expenses

Most of us know that medical expenses can be tax deductible but do you know what is a deductible medical expense and what is not?

• Alcohol Treatment (DEDUCTIBLE) – all expenses associated with inpatient rehab including meals and lodging.
• Fertility Treatments (DEDUCTIBLE) – including invitro, temporary storage, and even surgeries that reverse pregnancy prevention surgeries
• Weight Loss Programs (SOMETIMES) – weight loss programs CAN be deductible as long as the program is to treat a diagnosed illness such as hypertension, heart disease, or diabetes. If the program is purely for general health and well being it is not deductible.
• Service Animals (DEDUCTIBLE) – All costs associated with a guide dog or seeing eye dog including training and maintaining the dog, as well as food, veterinary care, and grooming.
• Health Club Dues (NOT DEDUCTIBLE) – Since this is in general related to general health and well-being, health club dues are not deductible
• Smoking Cessation Programs (DEDUCTIBLE) – these programs are tax deductible with the exception of over the counter drugs such as gum or patches
• Cosmetic Surgeries (SOMETIMES) – Cosmetic surgeries CAN be tax deductible if they are necessary to improve or correct an issue stemming from a congenital abnormality, personal injury, or disfiguring disease. They are not deductible if they purely to improve overall appearance.

Miscellaneous Expense

• Gambling Losses (DEDUCTIBLE) – As long as your gambling losses exceed any winnings, they’re deductible
• Casualty and Theft Losses (DEDUCTIBLE) – If it is an income producing property, such as a vacant lot, or rental property the loss is deductible. This also includes artwork, silver and gold, and even stocks and bonds.
• Fines and Penalties (DEDUCTIBLE) – The following fines and penalties are deductible:
  • Amounts paid for restitution
  • Amounts paid to become compliant
  • Federal or state taxes
  • Court orders even if a government agency is not a party
• Fines and Penalties (NOT DEDUCTIBLE)
  • Amounts paid to a civil or criminal liability
  • Parking tickets
  • Restitution paid to become compliant with the law
  • Reimbursement to government agencies for investigation and litigation expenses
• Campaign Expenses (NOT DEDUCTIBLE) – any expenses incurred by running for any office including registration and legal fees is not deductible.
• Club dues (DEDUCTIBLE) – certain club dues are considered deductible if their main purpose is not entertainment

• Boards of trade
• Business leagues
• Chambers of commerce
• Civic or public service organizations
• Professional organizations
• Real estate boards
• Trade associations
• Political Contributions (NOT DEDUCTIBLE) – any contributions made to a political candidate or committee is not deductible.

This is just a small example of some of the deductions that can be taken on your return. If you have more questions and would like to sit down with a CPA, please call us at (601) 936-9288.