UNUSUAL TAX DEDUCTIONS - SOME THAT WORKED AND SOME THAT DIDN’T

Some tax deductions are more obviously claimable than others. Charitable contributions are more widely recognized as deductible than something like a professional guitarist’s guitar strings. The matter is complex and depends on tax laws in your country, region, the nature of the deduction, your circumstances, etc. That doesn’t stop people from looking for write-offs, however. Keep in mind that just because someone tried to claim a deduction, though, doesn't mean they were successful!

Generally speaking, here are some steps you can take to determine if your deductible idea is legitimate:

Research

Start by researching the tax laws and regulations in your area. Look for information specific to the type of deduction you're considering.

Review Documentation

Make sure you have proper documentation to support the deduction. This could include receipts, invoices, contracts, or other relevant records.

Consider Limitations and Requirements

Even if a deduction seems eligible, there may be limitations or requirements that apply. For example, some deductions have income limits or can only be claimed if certain conditions are met.

Review Recent Tax Updates

This could include changes in tax rates, deduction limits, or eligibility criteria.

File Accurately

When filing your taxes, accurately report any eligible deductions on the appropriate forms or schedules. Be honest and thorough in your reporting to avoid any potential issues with tax authorities.

Most of that sounds straightforward, but to give you a rough idea of things people have tried to claim and how it’s gone, here are a few examples:

Guard Dog Expenses

Some businesses have tried to deduct the cost of guard dogs as a security expense. However, this deduction is typically only allowed if the dog is specifically trained for security purposes and not just a family pet.

Costumes for Actors

Actors have tried to deduct the cost of costumes used in performances. While some wardrobe expenses may be deductible for actors, particularly if they're required for specific roles and not suitable for everyday wear, extravagant or non-essential costumes may not be allowed.

Cat Food for Mousing

In rural areas, some businesses have tried to deduct the cost of cat food as a business expense, arguing that the cats kept rodents away from their premises. While pest control expenses are generally deductible, the IRS might question the necessity of cat food specifically.

Babysitting Expenses

Childcare expenses are generally not deductible, but some taxpayers have tried to deduct babysitting costs as a business expense, arguing that they needed childcare in order to work. However, this deduction is usually disallowed unless the childcare is directly related to conducting business activities.

If this all sounds overwhelming, reach out to us here at Genovations Accounting. Don’t stress your success.