CPA Monmouth – Crazy But Legal Income Tax Deductions – When tax time rolls around, you may be scrambling to come up with all the income tax deductions you can to offset what you owe to the IRS – especially if you’re self-employed. As accountants, we see a lot of preposterous-sounding deduction questions from our clients, but many of them are legit. Check out these crazy yet legal income tax deductions to try this year, if they apply:
MBA Tuition
Claiming the full amount of your MBA tuition may sound outrageous, but this deduction may be allowed depending on the circumstances. The IRS will consider three factors when allowing a deduction of business school tuition as an employee business expense:
- The person claiming the deduction must be established in his or her career, making good use of that education.
- The MBA must have been used to improve skills in a current job or business.
- The MBA cannot be used for a new trade or business.
If you don’t meet those requirements, you still have some options, namely claiming either the Lifetime Learning Credit or the Tuition and Fees Deduction for higher education expenses. The maximum is about $2,000 with these deductions, while you could gain tax benefits in the tens of thousands of dollars if you can legitimately claim the aforementioned employee business expense deduction.
Swimming Pools
Putting in a $30,000 swimming pool and claiming it on your taxes may sound ridiculous but it may have some merit to it – IF your doctor recommends swimming laps every single day for your health. Prescriptions for regular swimming when treating medical conditions like arthritis or emphysema can be a legitimate deduction, IF that’s the main use of the pool. If your pool is also used by the rest of your family on a daily basis and you have parties there throughout the summer, you’ll have a harder time claiming this deduction without a red flag from the IRS.
If you do manage to claim this, only the amount exceeding the property value increase is deductible. In addition, only the amount over 10 percent of income can be used towards the medical expense deduction if you are under the age of 65. If you’re over, that percentage drops to 7.5 percent.
Pet Expenses
While you certainly know you can deduct children as dependents on your taxes, did you know that sometimes pet expenses qualify too? Say you fancy yourself a dog rescuer who takes dogs in, gets them well and then matches them with a new home – all on your own time and dime. You COULD claim the cost of dog food, vet bills and medication as a charitable deduction, IF you can prove these acts directly relate to an approved charity or organization. You also have to prove those expenses were only used for that charity, not for your own pets; then you’ll have to cough up documentation that proves it all.
Here at Chris Whalen – CPA Monmouth we do our best to educate our clients on possible tax breaks and deductions, because we truly want you to save money. Some deductions may sound outlandish but all you have to do is ask and we will let you know if the deduction is, first off, legitimate for your situation, and second, whether it’s worth the possible red flags to even claim it in the first place.
Call today for your free evaluation and consultation!
CPA Monmouth | CPA Monmouth County
