Tax Deductions Not To Claim

When it comes to taxes, it’s usually good to try to save money by claiming as many deductions as possible. However, this is emphatically not the case with certain tax moves: namely, those that are illegal. Outlined below are some of the most notorious illegal tax deductions people have tried to claim. Don’t try to claim the following deductions, unless you are looking forward to IRS audits, to wasting your time dealing with paperworklawsuits, and jail time.

One tax lawyer’s client in New Jersey tried to write off the expense of surrounding himself and his loved ones in a personal “bubble” of breathable oxygen. Presumably, because that part of the country was so polluted and the surrounding New Jersey air so toxic, this man felt that he could write off the “family air bubble” as a medical expense. When the IRS saw reference to a mysterious “bubble” on the man’s tax forms, they immediately launched an audit. The auditor was so amused at what he saw that the man didn’t have to go to court or be jailed. However, the write-off was vetoed.

Claiming a “home office” is another opportunity for people to try to make dubious tax write-offs that can lead to severe penalties, and ultimately losing more money. It is true that if you use a certain space in your home purely for work, you can write off the cost of that space from your taxes. However, be sure to write off only that part of your home that is used purely for work. Do not do something crazy, such as trying to write off the entire cost of your house, or you will get audited and fined.

Whenever business and personal life intersect, there are gray areas that people will try to exploit come tax time. However, trying to exploit these ambiguities in the law too flagrantly doesn’t always work. For example, the costs of maintaining and fueling your car cannot be written off as a business expense except for those times when you use your car to travel for business. Thus, if you have traveled a total of 20,000 miles during one year, and only 1,000 miles for business, you can only deduct 5% of your car expenses. You certainly can’t deduct the cost of your whole car, just because you’ve occasionally used it for business travel.

Another area of controversy is who to claim as a dependent. The IRS now requires taxpayers to provide the social security numbers of all those whom they claim as dependents, and with good reason. You have to be able to prove that you are totally supporting someone’s life, if you claim that person as a dependent. At the same time, pets cannot qualify as dependents, regardless of how much you expend on the support of their lives. Thus, veterinary bills for your pets don’t count as a tax-deductible medical expense, either.

The donation of body parts generally isn’t tax-deductible. In order to claim tax deductions from charitable donation of property, you have to be giving away 100% of your interest in the property in question

Recent additions:

• The Signs of Impending Financial Ruin
• When Debt Rises From The Grave
• Some Tax Deductions People Miss
• The True Cost Of Medical Debt
• The Financial Benefits and Drawbacks of Marriage
• Foreclosure And Your Pets