Deductions owners miss — and three they overclaim

Reviewing a new client’s prior returns is the closest thing tax work has to archaeology. The same artifacts turn up every dig: deductions worth real money left unclaimed, sitting next to a few claimed positions that practically invite correspondence.

Commonly missed

The home-office deduction, abandoned out of fear that is roughly a decade out of date — for a genuine, regular and exclusive workspace it is well-settled. The qualified business income deduction’s aggregation elections, which many preparers never model. Retirement plans beyond the IRA: a solo 401(k) or cash-balance plan can shelter multiples of the limits people assume. Augusta-rule rentals, properly documented. And startup costs from the year before the business formally began.

Routinely overclaimed

One hundred percent business use of a vehicle — a log-less claim that examiners test first. Meals stretched to cover every restaurant receipt in the card statement. And the family payroll arrangement where a child is paid for work no one can describe. Each is legitimate in its honest form; each draws letters in its inflated one.

The pattern worth internalising: the tax code rewards documentation, not daring. The owners who save the most keep the best records — which is, not coincidentally, an argument for clean books.