3244 Brookside Rd 
Suite 140 
Stockton, CA 95219

Tax Read Time: 3 min

Tax Deductions You Won't Believe

While Americans are entitled to take every legitimate deduction to manage their taxes, the Internal Revenue Service (IRS) places limits on your creativity. Here are some examples of deductions from the IRS that were permitted and some that were, well, too creative.¹

Creative Deductions that Passed Muster

Usually a child’s school-related costs are not deductible. However, one taxpayer was allowed to deduct the cost of travel, room, and board as a medical expense for sending a child with respiratory problems to a school in Arizona.

Pet food typically doesn’t qualify as a write-off, except in the case where a business owner successfully argued that it was a legitimate expense to feed a cat protecting their inventory from vermin.

Does your child have an overbite? If so, you may find that the IRS is okay with a medical deduction for the cost of a clarinet (and lessons) to correct it.

A deduction for a swimming pool won’t float with the IRS, except if you have emphysema and are under doctor’s orders to improve breathing capacity through exercise. The deduction, however, was limited to the cost that exceeded the increase in property value. And yes, ongoing maintenance costs are deductible as medical expenses.

Deductions that Were Too Creative

The cost of a mink coat that a business owner bought for his wife to wear to dinner for entertaining clients was denied even though he claimed it was an integral part of dinner conversation and provided entertainment value.

Despite having dry skin, one taxpayer was denied a deduction for bath oil as a medical expense.

Losses associated with theft may be deductible, but one taxpayer went too far in deducting the loss of memories when her photos and other life souvenirs were discarded by her landlord.

One business owner reported an insurance payment as income, but then deducted the cost of the arsonist as a “consulting fee.”

Don’t expect taxpayers to pay for enhancements to self-image. Just ask the ballerina who tried to deduct a tummy tuck or the woman who tried to write off her Botox expenses.

Creativity is not something that the IRS typically rewards, so you should be careful testing the limits of its understanding. Seek the counsel of an experienced tax or legal professional for specific information regarding your situation.

1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

 

Related Content

Interested in a Fuel Efficient Car?

Interested in a Fuel Efficient Car?

Estimate how many months it may take to recover the out-of-pocket costs when buying a more efficient vehicle.

What to Look for in an Extended-Care Policy

What to Look for in an Extended-Care Policy

Here’s a list of 8 questions to ask that may help you better understand the costs and benefits of extended-care insurance.

Exit Strategies of the Rich and Famous

Exit Strategies of the Rich and Famous

Estate conservation is too important to put off. Do you have a smart exit strategy?

 

Have A Question About This Topic?







Thank you! Oops!

How Big is Money?

Learn a little about worldwide currency in this fun infographic

Investment Challenges of the Affluent Investor

Affluent investors face unique challenges when putting together an investment strategy. Make sure you keep these in mind.

Will Power

Preparing for the eventual distribution of your assets may not sound enticing. But a will puts the power in your hands.

View all articles

Home Mortgage Deduction

Use this calculator to assess the potential benefits of a home mortgage deduction.

Should I Buy or Lease an Auto?

This calculator compares the financial impact of leasing versus buying an automobile.

What Is the Dividend Yield?

This calculator helps determine your pre-tax and after-tax dividend yield on a particular stock.

View all calculators

An Inside Look at Retirement Living

A number of questions and concerns need to be addressed to help you better prepare for retirement living.

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

View all presentations

Jane Bond: Scaling the Ladder

Agent Jane Bond is on the case, uncovering the mystery of bond laddering.

A Fruitful Retirement: Social Security Benefit

Taking your Social Security benefits at the right time may help maximize your benefit.

How to Retire Early

Retiring early sounds like a dream come true, but it’s important to take a look at the cold, hard facts.

View all videos