Question

List items that are considered nondeductible expenses for income tax purposes?

Answer 1

The non-deductible expenses are the expenses that are not allowed to be deducted from income of the business to arrive at taxable income and hence the net taxes payable. Since, these expenses are not allowed to be deducted, they increase the taxable income and the taxes payable.

Items that are considered as non-deductible include:

1. Clothes used for business: If the clothes can be wore during social gatherings like suits, jeans, shirt, the cost is not deductible. Cost for clothes like uniforms can only be deducted.

2. Penalties imposed by Government: Such penalties are not deductible. It includes fines imposed by government.

3. Cost of Entertainment: The cost incurred for taking clients, vendors, etc. for entertainment shows are not deductible.

4. Travel expenses from home to work and back: Such expenses are not deductible.

5. Personal Expenses: Expenses such as personal phone expenses, personal car expenses cannot be deducted.

6. Contribution to political parties: Such expenses are not deductible.

7. Legal fees on purchase of property: Only a part of legal fees is deductible. Rest non deductible.

8. Traveling expenses for companions for non-business purpose: Cost incurred on travel of companions such as spouse, if not related to the business, is non deductible.

9.Gifts to business partners over $25: Gifts over $25 are non deductible.

10. Illegal Costs: Such cost are non deductible.