Accounting on Us
You will never get the deduction if you don’t ask, but no, you can’t claim your dog as a child.
The craziest things people have tried to deduct on their taxes
When it comes time to file their taxes, many people see that as an opportunity to get creative. They come up with all sorts of expenses that they want to deduct (usually accompanied by a story about how they know a guy who knows a guy who claims that deduction on his taxes). Honestly, we welcome those conversations because you will never get the deduction if you don’t ask, but please don’t take it out on us when we must be the bearer of bad news, and tell you that, no, you can’t claim your dog as a child.
Everyone wants to claim all the deductions they are allowed, but occasionally someone really pushes the limits of creativity. Over the years the IRS has reported many of the craziest deductions that taxpayers have tried to claim, and those stories can be both instructive and entertaining.
Paying your arsonist
One taxpayer hired an arsonist to burn down their struggling business so they could get the insurance proceeds, but rather than stop there, they also claimed the expense of paying the arsonist on their tax return. Perhaps they were confused because the IRS does in fact require you to report income generated from illegal activities, however it’s safe to assume your arson expenses are not deductible.
Yes, weddings are expensive. No, they are not tax-deductible. No matter how much you spend on your wedding, that’s a personal expense that you can’t write off for taxes. Some taxpayers have even tried to make the case that inviting clients to their wedding makes it a business expense, but the IRS has made it clear they do not agree.
Tattoos as a medical expense
Medical expenses are an area where taxpayers tend to get very creative and some have even tried to claim the cost of their tattoos. The IRS allows medical expenses that “involve diagnosis, cure, treatment or prevention of a disease or health condition.” Unfortunately, tattoos are generally viewed as elective and don’t meet that criteria.
Clarinet lessons as a medical expense
Ok, this one is easy, right? If tattoos aren’t deductible, then clarinet lessons can’t be either. Well, not so fast. In general, music lessons are not deductible, but one taxpayer was able to show that by playing the clarinet their child was able to lessen the pain of an agonizing overbite and thereby the cost of the lesson qualified as a deductible medical expense. This a great example of why it’s worth at least asking because sometimes your specific facts and circumstances can get you a deduction for something that would otherwise be non-deductible.
The cost of a fish tank
The IRS is going to be skeptical if they see any pet-related expenses on your return. One taxpayer claimed their fish tank among other furniture for their home. They did not ultimately get to take the deduction, but their creativity did earn them an IRS audit.
This story comes from the Netherlands and shows that it’s not just U.S. taxpayers who get creative. A woman worked professionally as a witch and accordingly was able to successfully claim deductions for herbs, stones, potions and fortune telling with crystal balls.
Farmers understand their breeding cows can be depreciated for tax purposes. Likewise, an ostrich farmer was able to successfully claim depreciation expense on their breeding livestock.
Here’s another reminder how important your facts and circumstances can be. Clearly you are not allowed to claim a deduction for the cost of the food for your family cat, but one couple who owned a junkyard were in the habit of setting cat food around their property to attract stray cats. They claimed the cats helped ward off snakes and rats and made the junkyard safer for their customers. The IRS challenged the deduction, but ultimately acknowledged that the cat food had a business purpose and was therefore a deductible expense.
Stories like these are amusing, but they also highlight that sometimes expenses can be deductible even if they don’t seem like it at first. If you think something might be deductible, it’s important to ask, because your specific situation could have a bearing on what’s deducible and what’s not. As your Henry+Horne tax advisors, we are an advocate for you and we will do our best to get you every deduction you are entitled to. But don’t hold it against us if we have to tell you that you’re getting a little too creative.
If you have questions regarding your tax situation, contact your Henry+Horne professional advisor.
Michael Anderson is a tax supervisor. He can be reached at MichaelA@hhcpa.com or (480) 839-4900.