11 of the Quirkiest Tax Facts You’ll Ever Hear
April 18, 2017 : Mike Slack - The Tax Institute
Urban legends abound when it comes to tax deductions and credits. You may hear “Did you know you can count the cost of an arsonist to burn down your business and deduct the payment to them as a “consulting fee”?” or “You can deduct the cost of boarding your dog while away on a work trip!” While these deductions bear no significance to the IRS, there are a handful of quirky tax facts that will leave you equally surprised and entertained. Here are some of our faves:
- Cat food: Can you deduct food for your household cat? No. But it may be an allowable business expense if used to attract wild cats to deter snakes from your business, a scrapyard.
- Clarinet lessons: A clarinet and clarinet lessons are tax deductible to help a child’s overbite.
- Posing oil: A professional bodybuilder is allowed to deduct posing oil as a business expense.
- Organic foods: The difference between the cost of chemically uncontaminated food and regularly treated food is allowed as a medical deduction if prescribed by a medical professional.
- Cost of moving a household pet: You know moving expenses are tax deductible, right? Well this includes the cost of moving a family pet. According to the IRS, “You can deduct the cost of shipping your car and your household pets to your new home.” (This includes anywhere within the United States.)
- Wrongful incarceration: Compensation wrongfully incarcerated victims receive are now fully exempt from federal taxation after a Tax Law change passed by Congress in 2015.
- Hobby expenses: Hobby expenses can be claimed as “other miscellaneous deductions.” While your hobby may not actually qualify you for a business tax deduction, you can deduct some of its expenses. However, you can only deduct as much as you generated in income from your hobby.
- Fraternity or sorority contributions: Contributions to a sorority or fraternal society, operating under the lodge system can be deductible if the contribution is used exclusively for charitable purposes.
- Home business landscaping expenses: The IRS allows a business owner who regularly met clients at their home office to deduct part of the cost of landscaping the property. This includes driveway repairs, as well.
- Extravagant costumes: Individuals in the entertainment industry are allowed to deduct costumes that are not suitable for everyday wear. Think: Lady Gaga.
- Roadkill credit: South Carolinians are allowed a state tax credit of $50 to $75 for each deer carcass they contribute to charitable organizations.