Wacky Tax Deductions


Bankrate.com surveyed accountants nationwide for its fourth annual survey of their clients’ craziest attempts to reduce their taxes. Here are some stories to share at your next party or around the office:

 

   An Arizona client sought a home office deduction for the toilet paper he bought for his house.

 

  A client going through a divorce brought in receipts for noncash charitable donations roughly equal to the dollar amount of her income. The Texas woman had taken her cheating husband’s possessions and donated them all to Goodwill. She was told she could only deduct up to 50% of her AGI. The return did not get audited.

 

  An Ohio woman tried to deduct her tricked-out hot tub for medical reasons. A portion of it was deducted, but that did not include the in-tub stereo, underwater speakers and mood lighting.

 

  A Texas woman didn’t like the mature trees in her yard so she dug them up and donated them to charity. She had to get an appraiser to value the trees, but the IRS did accept the deduction.

 

  An 85-year-old Tucson, Ariz., woman deducted more than $8,000 for dance lessons after her doctor suggested it would be good for her arthritic hips. The following year, she had receipts for more than $35,000 in lessons and $18,000 in gowns and expenses for cruises for her and her dance instructor, who was in his 20s. The accountant did not accept those expenses and called adult protective services. The client died before the investigation was finished.

 

  Some creative taxpayers tried to add Fido as a deduction. One man claimed his dog as a dependent. Another tried to write off dog food for his “home security system,” while another tried to claim his pet as a landscaping subcontractor.

 

  A 65-year-old Kissimmee, Fla., woman liked her 20- something student renter and handyman so much that she said he was a “nephew” and used him as a tax deduction. Her original accountant never questioned the deduction, which let her keep the rental income off the return. The IRS caught on three years later, and slapped her with $5,000 in back taxes and a $2,000 penalty. Her new accountant filed amended returns and eventually reclaimed some of the penalty money.

 

Source: Bankrate.com, www.bankrate.com.

 

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