The Internal Revenue Code is packed with thousands of tax deductions, from write offs for unreimbursed medical expense to deductions for cheese baskets for clients.
But because nobody wants to pay more than their fair share of taxes — and because the Tax Code is often dizzyingly complex — it’s the time of year when even honest taxpayers may find themselves considering “imaginative” deductions.
Some are totally legit; others are completely ridiculous, such as when Leona Helmsley attempted to deduct the cost of underwear as a business expense.
That’s not to say that the IRS hasn’t let slide a few wacky deductions – click here to see eight offbeat tax deductions that have actually worked.
Careful, though: the IRS considers each taxpayer’s situation individually — and there are many exceptions to every tax rule.
If the Feds disallow your deductions you could be subject to penalties and interest charges, so consult a tax expert before you get too creative. In the meantime, enjoy these inventive deductions.
1) Breast Implants
The IRS usually doesn’t accept cosmetic surgery costs as a medical deduction. But a Tax Court in 1994 allowed Cynthia Hess, an exotic dancer (stage name: Chesty Love) to deduct $2,088 for depreciation for surgical implants that enlarged her bust to size 56FF.
The court ruled that because the implants were so extreme (each weighed more than 10 pounds), they were soley intended to increase the profits of her business and were not for personal benefit.
“My salary as a dancer went up in direct proportion to the size of my chest,” she told the audience of the Jerry Springer show after the ruling.
2) Bodybuilding Oil
Photo: Steve Tolcher via flickr
For aspiring hulks who compete regularly on the professional bodybuilding circuit, that shiny stuff they smear all over themselves is a genuine business expense.
Corey L. Wheir, a part-time bodybuilder, in 2004 sued the IRS and won after it disallowed the body oils he’d written off as a business expense.
Tax Court found the oils were legit, but agreed with the IRS that the 3 pounds of bison meat Wheir consumed daily for “muscle development” was not deductible because buffalo meat is also regularly consumed by nonbodybuilders.
3) The $3,000 Your Brother Owes You
Yes, in some cases, it is possible to write off a bad personal loan of up to $3,000 on your 1040 form – even one from a family member.
But please don’t think the IRS will make it easy. You’ll have to prove there was a promissory note that spells out a repayment plan and a fair interest rate and show you made a good faith effort to collect. (Consider sending that deadbeat sibling an invoice.)
You’ll also need to explain why you’ve decided you won’t be repaid. Then again, it might be easier to write off your brother.
4) Drug Rehab
Attention Lindsay Lohan: inpatient treatment at a therapeutic centre for alcohol or drug addiction — including meals, lodging and in some cases acupuncture and equine therapy — may be deducted as a medical expense. (You can even include transportation costs to and from Alcoholics Anonymous meetings, if you go based on a doctor’s advice.)
If you end up in a swanky rehab facility, some of which charge $25,000 a month, you’re likely to end up with very large unreimbursed bills, which are a deduction. Winner!