I am often asked...  "Can I deduct my clothing for my job?"

My answer seems flippant to some, but it sums up the IRS ruling fairly well... If you look like a "geek" while wearing your work cloths, you have a good chance in getting a deduction

(1) Nonmilitary uniforms. In each case is taken individually and the IRS must determine if the uniform is suitable for ordinary wear. Some examples are: A deduction was allowed for an Amway distributor, a dairy worker and a professional musician. A deduction was denied for an automobile mechanic, a food server and a probation officer.

(2) Military uniforms. Courts have allowed deductions for military uniforms not authorized for off-duty use and those required for infrequent occasions by reservists. Otherwise, they have not allowed deductions for military uniforms because they can replace regular clothing.

(3) Other clothes. Courts have allowed deductions for clothes not suitable for general wear like formal attire, nurses' uniforms, theatrical costumes and clothes with labels, such as a company name. This raises a major question: Is suitability determined by what you generally wear or what anyone generally wears?

A manager of a high fashion clothing company was expected her to wear the dramatic, highly fashionable clothing the store sold. This meant dressing to kill at fashion shows and business lunches. Because the manager had to pay for these expensive clothes, they expected a deduction.

The court disallowed the deduction, explaining that the manager's lifestyle is unimportant. This clothing was suitable for general wear, therefore nondeductible because it's worn "normally" by a significant, although affluent, segment of society.

Beginning on January 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 50 cents per mile for business miles driven
• 16.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year's. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.

The business mileage rate was 55 cents in 2009. The medical and moving rate was 24 cents.

IRS has two reason to increase compliance measures for mortgage interest claimed as an itemized deduction:

1. Studies have shown that more mortgage interest is being reported by institions then some taxpayers declare as income - giving rise to the question, "How do these taxpayers pay the mortgage?"  It becomes suspect that some taxpayers may not be declaring all their income.
   Treasury Inspector General for Tax Administration - TIGTA - projected that 46,000 non-filers could collectively owe $625 million in additional taxes, penalties and interest for tax year 2005, while the bill could reach $801 million for about 91,000 taxpayers who underreported their income in that year.

I'm often asked if filing an extension will eliminate penalties charged by the IRS... and how much are the penalties.

* Failure to File Penalty - a "Valid" extension will relieve this during the extension period
* Failure to Pay Penalty
* Interest

Each is calculated differently. Here is a quick overview.