When you have a home business, it can be really tempting to deduct things you really shouldn’t be as business expenses.  This can be really dangerous, though, because the IRS is bound to notice if you are going overboard on your business deductions — and you can get in a lot of trouble if you get caught.

I worry about people I know doing this.  For instance, deducting personal vehicles, or a cell phone that is not really just for business.  Or taking the home office deduction when it really isn’t justified.

Now, it’s not a strong argument, but if you can legitimately say, “I didn’t know,” you may be okay taking the risk.  But it has to be an honest mistake.  For instance, if you have a home business and you try to deduct your hot tub spa as a cost of doing business (i.e., so that you can relax), I really don’t think the IRS will be too understanding of your “mistake” if you get audited — no matter what a cheap hot tub it was.

I guess one of the best things to do is use common sense.  If it feels like you’re trying too hard to justify an expense, if it’s not obvious why it’s a business expense, you probably shouldn’t be taking it.  Now that obviously isn’t the only determining factor, and you probably should consult a professional for more specific advice, but it’s a start!

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