Here’s a wake-up call to those who concoct creative tax dodges as did one taxpayer, who tried to claim a deduction for his fallout shelter. Expect the IRS to question those deductions that seem a bit strange.
Still, you have to give taxpayers credit for their ingenious and creative attempts to stretch the definition of a legitimate tax deduction. Take a peek at some of the novel ways taxpayers have attempted to skirt around taxation compliance.
Hairpieces and wigs. Only performers who earn their living in show biz can justify to the IRS writing off the costs of wigs and hairpieces. However, those who experience hair loss as a result of a medical condition may qualify for a tax write-off for those same vanity items.
Paying for services rendered by a live-in girlfriend. If her duties include finding furniture, overseeing repairs and performing household tasks, those expenses may qualify for an IRS tax write off. One taxpayer appealed and won a partial victory. The Tax Court determined $2,500 of the $9,000 he paid her was deductible as a business expense.
The bedroom tax. In the United Kingdom, under certain circumstances, citizens can be hit with the “bedroom tax,” which can be levied if people are living in spacious homes with extra rooms.
Leave it to those ingenious Brits: Some taxpayers found a loophole in this tax. Although a renter might average an £11 a week deduction for renting out a spare room, conversely they could rake in as much as £100 a week in rent by becoming landlords and would still be able to legitimately claim welfare!
For honest, hardworking taxpayers, deductions serve an important role in supporting a vigorous, vibrant economy. But leave it to those ingenious tax payers in the U.S. and across The Pond to devise ways to increase those write offs!
Make sure you don’t overlook any tax deduction, no matter how small. Those legitimate write-offs do add up and will ensure that you keep track of all the hard-earned dollars (or pounds) you’re entitled to write off.