15 Tempting Tax Deductions That Could Get You in Big Trouble

When tax season rolls around, most people look for every possible deduction to help pay for their bills and eliminate money stress. While maximizing deductions can lower your tax burden, some deductions aren't allowed by the IRS.

Claiming something you’re not entitled to — intentionally or unintentionally — can lead to penalties. That’s why it's essential to know which tax deductions the average American can’t claim.

Here are 15 deductions that the average American taxpayer cannot claim — and some alternatives that might be available instead.

As much as we’d love to write off our gym memberships as health-related expenses, they aren’t deductible. The IRS views them as personal expenses, not medical ones. 

If you work from home (and work out at home) to reduce stress, you might want to explore deductions like home office expenses instead.

Unfortunately, standard homeowners or renters insurance premiums aren’t tax-deductible. But if you operate a home-based business or rent out your home, you may be able to deduct a portion of your insurance costs as part of your business expenses.

This could help supplement your income if you earn extra money from a side gig.

Fees from personal credit cards, including late payment fees or annual charges, are not deductible. However, if you're running a business or side hustle and use a business credit card, the fees tied to that card may be deductible.

Tracking these business-related expenses may help you get ahead financially while reducing your tax bill.

You can't deduct expenses like groceries, clothes, or utilities that support your day-to-day living. But if you're working from home or using part of your home for business, you may qualify for the home office deduction.

This allows you to deduct a portion of your rent, utilities, and maintenance costs, reducing your taxable income.

If you’re paying for someone else’s travel, whether for a family member or a friend, you can't deduct these expenses. However, if you’re traveling for business or have work-related trips, those travel expenses could be deductible.

Remember, only trips directly related to generating business income qualify, so personal vacations don’t count.

Child support payments are not tax-deductible. However, if you’re paying for dependent care while working or looking for work, you may be eligible for the Child and Dependent Care Credit.

This credit helps working parents or caregivers offset the cost of caring for children or other dependents while they work to earn extra income.

Any fines, penalties, or tickets — whether they’re for speeding, parking violations, or late tax payments — cannot be deducted. These are considered personal legal infractions.

On the other hand, legal fees directly related to earning taxable income (like fees for drafting business contracts) could be deductible if they’re tied to your work or business.

The IRS doesn’t allow hobby losses to be deducted from your taxes, even if you spent more on your hobby than you earned. However, if you turn your hobby into a business and actively work to make a profit, those losses could potentially be deductible.

Bribes, illegal kickbacks, or other forms of corruption are strictly non-deductible, and claiming them can lead to serious penalties. No legal deduction replaces these, and there’s no workaround — illegal activity is never deductible.

For those looking to avoid any legal trouble while increasing their earnings, it’s better to focus on legitimate ways to make extra money online or through side hustles.

If you’re paying premiums for personal disability insurance, you won’t be able to deduct those costs. But if you're self-employed and have business-related insurance, those premiums may be tax-deductible.

Always check the rules regarding what qualifies as business expenses before taking this deduction.

The cost of basic residential telephone service is not deductible. However, if you operate a business from home, the portion of your phone bill related to business use (such as a separate business line) may be deductible.

This may help reduce your taxable income, especially if you're working from home to make extra money.

While donating to political campaigns or causes might be something you’re passionate about, political contributions are not tax-deductible. On the other hand, donations to qualified charitable organizations can be deducted.

Make sure to get a receipt and confirm that the organization is eligible for tax-deductible donations before claiming this on your return.

If you miss out on vacation days from work, you can’t deduct the value of those lost days from your taxes. But, if you’re self-employed and lose business income due to canceled trips or unexpected events, those business losses might be deductible.

It’s important to separate personal vacation losses from business-related losses.

Selling personal items at a loss, such as furniture or electronics, isn’t something you can deduct. However, if you lose money from investments, such as selling stocks for less than you paid, you can claim capital loss deductions.

This can help offset other investment gains or reduce your taxable income.

If you pay for licenses that aren’t tied to a business or professional work, such as a fishing or hunting license, they aren’t deductible. 

But if you have professional licenses (for doctors, lawyers, or other careers), the cost of maintaining those licenses could be tax-deductible as part of your business expenses.

Claiming a deduction that you’re not entitled to can lead to an IRS audit, and if caught, you may face penalties, back taxes, and interest. The IRS has systems in place to identify improper deductions, and audits can occur years after a return has been filed.

If you're unsure about any deductions, it's always a good idea to consult with a certified tax professional to avoid these consequences.

While some deductions may seem tempting, it’s crucial to know which ones are not allowed by the IRS to avoid penalties and audits. 

Being aware of legitimate deductions, such as those tied to business expenses or charitable donations, can help you maximize your return.

Which deductions will you be exploring to help pay for your bills or even make extra money during tax season?