The first criteria for evaluating any transaction or strategy you are considering should always be financial. Taxes are secondary.

Many years ago, one of my clients proudly announced to me that his employer offered to reimburse him for job-related mileage, but he turned the offer down because then he would not be able to deduct the business travel on his Form 1040.

Back then, employee business expenses were deductible in full "above-the-line" as an Adjustment to Income. This is no longer true — you now must itemize in order to claim a deduction for job-related expenses.

I avoided the temptation to tell the client that he was a complete idiot, and attempted to explain, with great patience and tact, that taxes are only pennies on the dollar.

It is much better for someone to give you $1 tax-free than it is to be able to save 30 cents by claiming a tax deduction. Similarly, there is no benefit in spending $1 needlessly to save 30 cents in taxes. You haven't saved 30 cents — you have actually lost 70 cents!

And there is another consideration. Deductions for medical expenses, taxes, contributions, interest, job-related and investment expenses are of no value unless you are able to itemize on Schedule A.

—New Jersey tax pro Robert D. Flach has been preparing 1040s for individuals since 1972.