As the year comes to a close and you're bleary-eyed from present-buying and year-end tax planning, we thought we'd lighten the mood a bit. While you may not think there's much to laugh about when it comes to taxes, you might just be surprised.
We all know about the good old standard tax deductions like write-offs for charitable donations and home offices. And thousands of Americans are taking advantage of the new tax credit that Congress just extended for first-time home buyers. But there are a few breaks that you might not realize the IRS is willing to stamp "approved" that could save you money on your tax bill. And if you can't claim them on your forms this year at least you can benefit from a little laughter.
Okay, not just any help. But if you need to pay for child care because you are donating time to a nonprofit organization or you are doing charitable work you can deduct that fee from your 1040 form. That's right - if you pay someone to babysit because you're working for someone for no pay, you can write it off. Admirable to be sure, but it seems like a long way to go around the bend to save a little on your tax bill.
Since this deduction was originally written into the tax code in 1962, accountants and tax lawyers have made sure their clients are keeping all their doctor's notes. The rule states that anything that your doctor prescribes as "medically necessary" can be deducted from your taxes.
That means that if your doctor tells you to get therapeutic massages you can keep the receipts and knock that expense off as deductible. The same goes for aqua therapy (backyard pool installation and maintenance anyone?) and restrictive diets (make that call to Jenny Craig).
However be aware that the IRS combs through medical deductions very carefully so don't try to get creative or it could end up costing you much, much more. (If the IRS finds errors, it will cost you. Find out how to fix them - and prevent them in the first place in Inaccurate Tax Return, Now What?)
Okay, so FedEx won't really overnight your family's pooch - but you can deduct the expenses associated with moving any of your personal effects due to a job-related relocation. And, as a personal effect, your favorite animal's transportation can be written off your personal taxes.
Attorney Fees for Illegal Activity
Wait, what?! It's true. While you are required to pay taxes on any income earned through illegal activity such as theft, bribery or drug-dealing, if you are unfortunate enough to get caught, the good news is you can write off the cost of hiring an attorney to defend you during your trial.
To Ride the Wind
Concerned about the environment? Not worried about what your neighbors think? Consider installing a wind energy system and you could get a tax write-off. Put up one of those attractive wind turbines that dot the plains and Uncle Sam will repay your environmental kindness with a nice little break on your tax return.
Most of us know that you can deduct the interest you pay on your mortgage but we typically tend to envision a neat single-family home surrounded by a white picket fence. However if you got a loan to finance a houseboat that you call home (provided it has sleeping, cooking and "toilet facilities"), you can write that interest expense off as well. I wonder if the Captain, Gilligan and his crew split the write-off?
If you are a small business owner the list of potential tax breaks can sound just downright strange. Anything that is can be demonstrated to be a legitimate "ordinary and necessary" business expense can be deducted. So that means you might be able to deduct the following. (Running your own business has both personal and financial perks. Find out more in 10 Tax Benefits For The Self-Employed.)
- Jetting Off to Jamaica
If you decide to reward your employees with a company retreat in Bob Marley's home country, or to plan your company's next strategy meeting in sunny Barbados the tax man will allow you to write it off. In fact any business meetings held in some of the most beautiful places in this hemisphere including Barbados, Costa Rica, Dominica, the Dominican Republic, Grenada, Guyana, Honduras, Jamaica, Saint Lucia and Trinidad and Tobago - not to mention Canada, Mexico and any U.S. state or territory - can be claimed as a legitimate, and deductible, expense.
- Captain Ahab would Approve
To help Native American Eskimos in his home state preserve their cultural heritage and custom of whale-hunting, former Senator Ted Stevens was able to insert a $10,000 deduction for qualified whale-hunting expenses in the American Jobs Creation Act of 2004. So if you're a whaling captain recognized by the Alaska Eskimo Whaling Commission you can write off money that you shell out for whale-related work expenses like repairing your boat or buying food for your crew.
- Shipping Sheep
If you are a farmer and you need to pay for sheep - or any other qualified form of livestock including "fur-bearing animals" - to be shipped to your ranch, you can write if off on your taxes. For that kind of delivery, you should plan on tipping your mailman well.
The Bottom Line
While taxes might not seem like a very funny topic, hopefully some of these available deductions tickled your funny bone. At the very least, you or someone you know might benefit from one of these odd write-offs. (The receipts you cram into your wallet could be replaced with cash come tax season. Find out how you could save in 10 Most Overlooked Tax Deductions.)
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