Wild, wacky and illegal tax deductions
Tuesday, February 28, 2012
Americans seem to be their most creative when they're doing their taxes. They will try to convince their tax pros and the IRS that a wide range of weird claims are legitimate ways to reduce their tax bills.
One area that always gets a lot of envelope pushing is dependents.
First off for my friend and fellow feline lover Tracy, I must once again tell you that no, you still cannot claim your cat as your dependent.
The answer is the same for dog lovers. Sorry pet owners.
Also don't try these wild claims that were caught by members of the Minnesota Society of CPAs.
One man wanted to claim his elected official as a dependent because he "pays his salary." My suggestion, "fire" him by voting in the next election.
Then there was the woman who wanted to include the months she was pregnant as qualifying for a dependent claim, even though she relinquished rights to the child after its birth.
And while spending a few weeks at a rental home in Arizona might make your feel 1,000 times better, you are going to have a tough time convincing the IRS that it's a legitimate medical expense.
But my favorite is the person who tried to deduct his divorce attorney's fees as an "investment." He didn't specify what type of investment, so feel free to insert your own "take my wife (or husband), please" speculation.
The flip side of that wacky write off is the annual attempt by newlyweds to classify wedding costs as business entertainment expenses because clients were invited. Or even as charitable expenses. Maybe because the ceremony was in a church? Sorry, disallowed!
Let's wrap this tax adventure up with a couple of particularly inventive, and icky, deduction attempts.
There's the guy who tried to deduct the costs of donating his sperm to an in vitro fertilization lab.
No, no and no, said the court which ruled on the claim. "Petitioner had no physical or mental defect or illness which prohibited him from procreating naturally...petitioner's choice to undertake these procedures was an entirely personal/non-medical decision."
And a New York appeals court was just as adamant in telling an Empire State taxpayer that patronizing prostitutes is not medically deductible "sex therapy."
Better, and legal, tax breaks: You can get some ideas on legitimate medical expense deductions in previous blog tips on maximizing medical deductions and bunching your medical expenses .
And for general and legal ways to trim your tax bill, check out these overlooked tax deductions and credits.
Hey tax pros, what have your clients tried to deduct, at the state and federal levels, that top these wacky write-offs? Inquiring minds want to know.
Also feel free to share some helpful tax breaks that are too often ignored. We'd all appreciate it.
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