Many Americans get creative at tax time, pushing the limits on deductions to reduce their tax bill to Uncle Sam.
The goal, of course, is to get away with as much as possible without getting a knock on the door from the Internal Revenue Service.
You’d be surprised at what the agency allows tax filers to deduct — everything from the cost of tanning oil to music lessons.
To avoid the harsh gaze of the tax man, keep accurate records that back up your deduction such as receipts for donations, medical expenses or business costs.
If your deduction seems like a stretch, check to see if any previous court cases or IRS filings can back up your claim. If not and your deduction is denied, you could face back taxes plus interest and possible penalties.
Here are six unusual deductions the IRS approved and four others that didn’t pass the smell test.
In 1962, the IRS ruled that a taxpayer could deduct the costs of a clarinet and clarinet lessons for his son because an orthodontist recommended playing the instrument as a way to treat his severe overbite.
In 1944, the U.S. Tax Court said a taxpayer from Cleveland could write off almost $1,000 for costs related to sending his daughter to a boarding school in Tucson, Arizona. The five-year-old girl suffered from chronic bronchitis, sinusitis and asthma, and was sent to the school in the warmer weather for her health – on doctor’s orders. Her health improved and the deduction was considered a medical expense.
A Wisconsin bodybuilder deducted almost $14,000 from 1999 to 2001 for the cost of three body oils – including a tanning product – that helped his career. The U.S. Tax Court allowed the business expense write-off because the oils were primarily marketed in bodybuilding magazines, instead of sold to the public.
An exotic dancer in 1988 wrote off about $2,000 for the depreciation of her breast implants, arguing to the U.S. Tax Court that the implants were a “stage prop” that boosted her earnings substantially. Before the implants, she made up to $750 a week. After, her earnings in a 20-week period were $70,000, or about $3,500 a week. The U.S. Tax Court ruled that her implants — size 56N after a second surgery — were for work rather than a personal benefit, and allowed the deduction.
To treat severe allergies to chemically contaminated food, a Chicago couple in 1971 could eat only pricey organic food as prescribed by three different doctors. The pair deducted as a medical expense the difference in price between the organic food and regular food treated with chemicals. The U.S. Tax Court allowed the $3,000 deduction.
South Carolina scrap yard owners in 2001 wrote off $300 for the cost of cat food as a business expense, claiming the food attracted wild cats to the business to scare off snakes and rates. The deduction was approved.
Going too far
There is such a thing as going too far with unique deductions. Here are four instances when taxpayers tried to claim an odd deduction, only to be denied, according to H&R Block.
Writing off your life: One taxpayer with a real estate business calculated the value of his life, time and expertise to his business, coming up with $1.75 million. He then tried to amortize that amount as a business expense, but the IRS said no.
Deducting crime costs: The owner of a failing furniture store paid someone to burn down his store. As he should, he reported the insurance he received as income to the IRS. But he went one step too far and deducted what he paid the arsonist as a consulting fee — and admitted that during the IRS audit. Oops!
Dress for success: A businessman tried to write off the cost of a mink coat for his wife to wear to business functions. It wasn’t allowed.
Groceries as medicine: A diabetic on a restrictive diet tried to deduct the costs of lettuce, tomatoes, artificial sweeteners and reduced-salt foods as medical expenses. The IRS denied the claim.
After so many tax changes this year, what will filers try next?
Source: Janna Herron, USA TODAY
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