When people want a bigger refund, tax-time imagination tends to run high. Every year, millions of Americans comb through receipts and bank records, asking the familiar question: “Can I deduct this?”
The federal tax code does permit deductions for qualifying expenses, but the difference between smart tax planning and an audit risk can be razor-thin. From mileage for volunteer work and medical home improvements to gifts for grandchildren, the IRS has encountered nearly every kind of claim and applies strict rules on what qualifies.
Whether you file on your own or have years of self-employment experience, these five real-life tax examples can help you tell a valid deduction from a mistake that could cause trouble in tax court.
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