With not long to go until tax day on April 18, many Americans will be looking for imaginative ways to avoid forking over money to the IRS. Some taxpayers undoubtedly straddle the line between valid and “creative” deductions on their tax returns.
Here are six expenses you shouldn’t try to deduct on your taxes in 2023:
As most landlords and rental property owners know, general repair material and labor costs are deductible expenses. But repairs that enhance the quality of your property, like carpet removals, are improvements, according to IRS publication 527. There are specific ways to claim repairs and improvements on your taxes, but you definitely can’t claim the removal of carpets as a medical tax deduction.
As the Fiscal Times describes, in 1993, a California woman who just happened to have started a home-based interior design company deducted $14,098 for the removal of carpet from her house — plus the the cost of installing of red oak hardwood floors and repainting of her house — as a medical expense. A U.S. Tax Court rejected a 13-year-old recommendation from her doctor that removing her carpets would help with her dust allergies.
The IRS permits taxpayers to deduct dental expenses — including dentures — that exceed 7.5% of your adjusted gross income, thus reducing your taxable earnings. However, these are deemed personal expenses, not business ones.
In 1935, character actor Ned Sparks, deducted the cost of two sets of upper dentures as an ordinary and necessary business expense on his tax return. Claiming the false teeth helped his articulation and removed a hiss from his speech while acting, Sparks could not prove that the dentures were for business use only and not for personal use. Per Casetext and the Fiscal Times, the U.S. Tax Court and the Board of Tax Appeals agreed that Sparks didn’t have a case, with the board declaring, “It would be difficult to imagine anything more personal than a set of false teeth.”
If required in a professional capacity, lessons are considered “ordinary and necessary” deductions for dancers by IRS definitions. Maintaining and improving job skills is integral to one’s job as a dancer or instructor. And claiming an American opportunity or lifetime learning credit for dance classes that are part of your college program’s tuition is acceptable. But for health reasons? Not so much.
Taxpayers have attempted to claim dancing lessons as medical expenses to treat everything from anxiety and depression to arthritis and varicose veins, but those efforts have been in vain. So, if your doctor recommends Zumba classes for whatever ails you, it’s a healthy suggestion, but not a financially sound one.
Despite detractors’ best efforts, mink coats are still popular in some social circles as symbols of luxury and affluence. You can make a tax-deductible donation of your old precious fur to the humane society, but deducting a new fur purchase for social schmoozing is a networking no-no.
One-fifth of the cost of a $2,500 mink coat bought for the purpose of mingling with associates at a National Distillers Company function was claimed as a deduction on a New York couple’s tax return in 1947. Per Leagle, because “the garment was admittedly worn on social occasions unconnected with business and such personal expenses are denied deduction by section 24, Internal Revenue Code of 1939,” the claim was denied by the United States Tax Court. If company employees wore mink coats as uniforms on the job only, this couple might have had a good case.
Individuals suffering from diabetes often have a difficult time managing a restrictive diet given the overabundance of sugary and carb-heavy foods that crowd today’s grocery shelves. Unfortunately, diabetics are not given special treatment when it comes to claiming healthy foods on their taxes like they are with expenses related to monitoring and treating their disorder.
When an Illinois taxpayer with diabetes tried to deduct grocery expenses of $461.38 as part of his medically prescribed diet, the Tax Court intervened. In its ruling, the U.S. Tax Court denied the deduction, saying these were “substitutes for foods normally consumed by a person, and as such, their cost constituted a nondeductible personal expense,” according to the docket supplied by Leagle.
Turning around a failing business can be a Herculean task. While some owners simply accept the pitfalls that come with running their own company as they try to better their lot, others resort to less legitimate means to rid themselves of a corporate burden.
Burning down one’s own business for insurance money is a common crime story trope, but a real-life taxpayer who hired an arsonist to do the dirty deed actually had the audacity to claim a deduction on his taxes. Besides pocketing $500,000 in insurance money, CBS MarketWatch.com noted that the Pittsburgh, Pennsylvania furniture store owner deducted $10,000 paid to the arsonist as a “consulting fee.” Needless to say, the IRS took exception to this deduction.
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