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.
