10 Things You Should Never Deduct From Your Taxes

3 of 5

6. Extravagant Gifts

extravagant gift

If you are a small business owner, the last thing you want to do is to try to deduct the cost of extravagant gifts you send to customers. Why? Well, because there’s actually a limit on how much you can deduct per customer– $25 to be exact.

That being said, if you want to be able to deduct the whole amount of the gift, opt for something not so extravagant, like some flowers or a fruit basket. Otherwise, know that you won’t be compensated for any amount that goes over $25.

5. Over-the-Counter Medications

over the counter medication

Most over-the-counter medications, for example, Tylenol and Theraflu, are not tax-deductible. Prescription drugs, on the other hand, are tax-deductible… which leads to the next point.

If a doctor has prescribed an over-the-counter medication, then, yes, it is tax-deductible. So are over-the-counter pregnancy and blood-sugar level testing kits, as are breast-feeding supplies, including bottles and pumps.

Insulin is not technically viewed as a prescription drug. That’s because you can actually get it– at least one form of it anyway– without a prescription.

Human Insulin can be purchased without showing a pharmacist a prescription, although you still need to get it from a pharmacist. Don’t worry, all forms of insulin are tax-deductible.