• Summit Bookkeeping

Business Expenses You Can't Deduct

Updated: Jun 28

In our previous post, we went over some common deductions for business owners. You might have wondered, what can’t I deduct? Here are some business expenses that are not deductible:


Political contributions

Any political contributions, donations, or payments cannot be deducted.


Club and membership fees

Fees for country clubs, fitness centers, and hotel and airline memberships are not tax deductible. However, fees for professional clubs related to your industry, such as the Chamber of Commerce, may be deductible. If you're unsure, it's best to ask a committee member if you can deduct membership fees.


Clothing

Buying a new suit to impress a client might get you the sale, but it won’t give you the deduction. Only clothing that is considered not suitable for street use, such as branded uniforms, a lab coat, scrubs, or a hard hat, can be deducted.


Fines and penalties

Although some business taxes and insurances are deductible, if you’re late to pay or make an error, you can’t deduct the fines and penalties associated with it.


Entertainment

The Tax Cuts and Jobs Act eliminated deductions for any activities considered entertainment, amusement, or recreation. For example, tickets to a concert, day passes to the fair, or a round of golf, even if they’re with employees, clients, or other business professionals, are not deductible. 


Illegal transactions

This one is obvious, but if you’re engaging in an illegal transaction such as bribing someone, paying a salary to someone who can’t work legally, or purchasing an illegal item under federal and/or state law, you can’t deduct the payment. 


Commuting Costs

The cost of commuting to and from work cannot be deducted. However, you can deduct certain car expenses if you or one of your employees uses a car you own or lease for business purposes.


Can I Deduct This?

This post is for information and educational purposes only. It is not meant to be tax or legal advice. If you’re unsure about a deduction, you should always consult your accountant or bookkeeper.