Spooky Tax Deductions: Savings From The Dark Side
Most people are familiar with the common deductions like mortgage interest, charitable donations, and medical expenses.
However, the tax code holds some truly bizarre and spooky tax deductions that might just spook you. In honor of Halloween, let’s look at strange deductions that can ward off those evil taxes.
Ship Repairs for Whalers
Ahoy there, whaling captains! Did you know that you can claim up to $10,000 for ship repairs and equipment? It’s a deduction that sounds like it belongs in the annals of maritime lore. But there’s a twist – this tax break comes with a special requirement in the United States. To qualify for this deduction, you must be a Native American. If some of you whalers have been slacking on genealogy, here’s your sign to start.
Exceptional Trees in Hawaii
If you have an araucaria heterophylla, commonly known as the Norfolk Pine, in your backyard and you reside in Hawaii, you’re in luck. In the Aloha State, the Norfolk Pine is considered an “exceptional tree,” and you could receive a $3,000 deduction just to maintain this unique species. Do talking trees count though? Asking for a friend.
Moving Expenses for Pets
Moving for work can be a taxing experience, but there’s a silver lining – you can deduct your moving expenses, including the costs associated with moving your beloved pets. One question; what about human pets?
Restitution in a Fraud Case
Crime doesn’t pay, but sometimes, you can deduct its costs. Take the case of two doctors sued for insurance fraud. After admitting liability and agreeing to reimburse the insurer for their losses, the IRS ruled that the repayments are deductible. There’s a catch, though – it’s a miscellaneous itemized deduction allowed only to the extent it exceeds 2% of the doctors’ adjusted gross incomes. A reminder that even in the world of taxes, crime doesn’t fully escape the IRS’s scrutiny.
Swimming Pool for Medical Purposes
Imagine being able to deduct the cost of a swimming pool from your taxes. Well, you can, but there’s a catch. The pool must be necessary for medical purposes, and proving its necessity can be as challenging as swimming the English Channel. You may have to show that no one else uses the pool… I was today years old when I learned that The Ring was about tax deductions.
Tax Breaks for Drug Dealers
Believe it or not, even drug dealers have tax obligations. The Tax Court has clarified some intriguing details in this regard. While you can’t deduct the cost of baggies, soil for marijuana plants, or the apartment you work from, you can deduct the cost of the product itself. Uhm… What?
If you’re trying to kick the habit, there’s a tax deduction for you too. Costs of programs or prescription patches and drugs aimed at helping you quit smoking can be claimed. However, over-the-counter patches and other quit-smoking items won’t extinguish your tax liability. Quitting is hard, but smoking may be a greater threat to your health.
Defense Costs for Criminals
In a surprising twist, if you find yourself on the wrong side of the law and lose in a criminal case, you can deduct your legal fees. Your defense is considered an “ordinary and necessary expense,” even in the spookiest of legal proceedings.
That cash you lent your friend who never paid you back? There’s a glimmer of hope – you can write off the unpaid amount on your taxes, provided there’s no hope of collecting payment. It’s a generous gesture from the IRS to ease the pain of financial betrayals.
Bow & Arrow Excise Tax
Hunting werewolves in the kingdom yonder? The government imposes an excise tax on arrows, with the proceeds going towards wildlife restoration. The tax, which was 46 cents as of 2012, applies to arrows that are more than 18 inches and suitable for specific types of bows. Wooden arrows designed for use by children, however, are exempt. The IRS likes its arrows bloody.
This deduction is right there in the tax code, but it doesn’t make it any less strange. You can stock up on pregnancy tests at the pharmacy because there’s nothing in this deduction that requires the test be administered by a physician. Babies are always beautiful, but some daddies and mamas can be – well, scary.
Transportation to Donate an Organ
For the generous souls who donate organs, there’s a silver lining – you can deduct any medical costs associated with the donation, including transportation expenses. It’s a heartwarming deduction that recognizes the selflessness of organ donors. Coupled with the tax breaks afforded to criminals – I see one disturbing loophole emerging. Yikes!
Fancy Dresses That Keep You Standing
If you ever find yourself needing to deduct the cost of a fancy dress, make sure it’s so tight that you can’t sit in it. The late celebrity Dinah Shore claimed formal dresses on her returns, and the IRS raised an eyebrow. Dinah’s defense? She wore these gowns only on her television show, and they were so snug that sitting was impossible. The IRS eventually allowed her to deduct the dresses, albeit with some scrutiny. Lace up those corsets wenches!
Addiction Treatment Expenses
For those struggling with addiction, the IRS offers a lifeline. Costs related to quitting drinking, smoking, or substance abuse can be deducted. This includes the cost of products or programs designed to help you quit, in-patient treatment at a drug or alcohol facility, and transportation expenses to and from support meetings. It’s a deduction that recognizes the importance of seeking help and recovery. Sharing this one because every spooky list deserves a hero.
As you prepare to file your taxes, keep these spine-tingling deductions in mind. While they may seem unusual, they are very much a part of the tax code. So whether you’re a whaler with a knack for ship repairs, a gardener tending to exceptional trees, or someone simply trying to kick a bad habit, these spooky deductions might just save you some naughty money come tax season. If you’re frightfully serious about killing all excess taxes this year and forevermore, schedule your free consultation with us today.