The 5 Biggest Tax Deduction Myths

I'm not a tax expert, but I did find some interesting information from a 2004 CNN article. This information may be outdated, but I thought it was interesting to share anyway.

Please consult with your tax preparer or accountant to see if these are actually true.

The article outlined the following as personal and business tax deduction myths:

1) Uncle Sam will help you buy that SUV. That may be what a dealer told you, but since when is a car dealer your go-to source for tax information? Some consumers, apparently, have come to believe they can get a tax credit just for buying an SUV, according to the National Association of Tax Professionals. Not so.

However, there is a tax break for SUV buyers who are small business owners. In a controversial move, the U.S. government decided to allow taxpayers to write off up to $100,000 for the purchase of a new SUV in the year it is purchased so long as the vehicle is used for business purposes and weighs more than 6,000 pounds.

2) Hey, honey, guess what? We can write off the house. For some who run home-based businesses, "the myth is you can write off 100 percent of your home," said enrolled agent David Mellem of Ashwaubenon Tax Professionals. The truth is you can only write off the portion of your home that is dedicated to your business.

3) Have medical receipts; will deduct away. Medical expenses may be deductible if -- and it's a huge "if" -- they exceed 7.5 percent of your adjusted gross income (AGI).

That's a higher threshold than you may think and the payoff once you reach it may not be huge. That's because if you do manage to spend 7.5 percent of your AGI in out-of-pocket medical expenses, you'll only be able to deduct the amount above that 7.5 percent.

Remember, "out-of-pocket" means expenses that are not eligible for reimbursement from your health insurer or from your flexible spending plan. "You can't double dip on that," Perlman said.

4) I've dieted, now I'm ready to deduct. That weight-reduction program has done wonders for your waistline, but it probably won't shrink your tax bill.

A weight-loss program may qualify as a deductible medical expense, but only if it meets certain requirements. You can't deduct it unless it your physician prescribed it and it was intended to treat a particular disease.

5) I got the nicest dress for work. I can't wait to write it off. Just because you have to get dressed for work, doesn't mean you get to deduct the cost of your clothes as a work expense.

There is one exception, though. You may deduct the cost of your work clothes if your employer requires you to buy clothing that is specifically not made for everyday wear, such as a uniform or clothing with a company logo.