There’s No Way That’s Tax Deductible
What do pets, loved ones, and Goodwill donations have in common? People want to know if they can write them off on their taxes.
Seriously, according to tax preparers, tax season is riddled with oddball question regarding deductions. And it makes sense, really. I mean, who wouldn’t want to milk their deductions for everything they’re worth?
Some people “are very creative and want to see if they can outsmart the tax code,” S. Miguel Reyna, a CPA in Dallas, tells the Wall Street Journal.
“How creative?” you ask. Check out some of these examples provided by the WSJ:
How do I value a taxidermy I donated to charity? (It can involve estimating stuffing and mounting costs.) I’m putting a swimming pool in this year, I’m going to use it for exercise, can I deduct it as a medical expense? (Likely not.) What if my neighbor gives me a cow in exchange for help building a barn? (You must report the fair market value of that cow as ordinary income.)
But those, of course, are examples of some of the rarer questions people ask at this time of year. Here’s a list of the more regular “offbeat” questions tax season inspires [all block quotes via the WSJ]:
Can I claim my girlfriend or boyfriend as a dependent?
“Boy, that one comes up so often,” Bob Meighan, vice president at Intuit‘s INTU +1.76% TurboTax, says of this question. “The answer is yes, in some cases.”
Claiming a dependent reduces your taxable income. Dependents can be family members and individuals who aren’t family members, but meet criteria.
To claim a nonrelative as a dependent, he or she had to live in your home for the full tax year and make less than $3,800 in gross income during that time. You also generally must provide more than half of the person’s financial support, and he or she can’t be claimed as a dependent by anyone else, among other criteria, says Mr. Meighan.
I left a bag of clothes at Goodwill. What’s stopping me from saying it’s worth $10,000 and deducting that amount?
If you itemize your deductions, you may be able take the charitable deduction for donating clothes that are in good condition to thrift shops. But gauging the value of that out-of-style blouse requires help, especially since some charities leave it up to you to determine how much you’ve given.
The Salvation Army has a guide to help calculate the value of clothing, furniture and household goods at satruck.org/donation-value-guide. TurboTax also offers free estimates at ItsDeductible.com.
What’s stopping you from writing off more than the true value? The IRS has documentation rules for these kinds of donations that vary depending on their value. If an item or group of similar items donated is worth more than $5,000, you typically have to obtain, among other things, a qualified written appraisal of the item or items donated.
Can I deduct my pet?
Fido may feel like your child, but that doesn’t mean he’ll land you a tax break.
That said, there are rare circumstances where a pet may qualify for a tax deduction if you itemize. If your pet is a service animal for a disability that you have, the cost of buying, training and maintaining the animal may qualify as a medical expense. This typically includes vet visits, grooming and food, according to the Internal Revenue Service.
A big caveat: You can only deduct medical expenses that exceed 7.5% of your adjusted gross income in 2012. (The threshold is 10% for 2013 for most people).
What’s more, you may be able to deduct costs related to a guard dog employed by your business for protection, depending on the circumstances, according to G. Scott Haislet, a CPA and tax attorney in Lafayette, Calif.
Click here to see the full report.
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Featured image Getty Images.
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Comments (60)
Libzilla
Posted on February 17, 2013 at 7:19pmTo all of you silly fools who think you should be able
to write off the Federal Government as a “Dependent”
on your tax return, you would have to show that you
are required to pay for their lodging, food, care, upkeep,
schoo…. uh… ahem… cough,cough, ummmmn,
I guess I see your point.
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G-WHIZ
Posted on February 16, 2013 at 9:10amPres-Billi-Klinton took of his dirty underware for several dollors each piece. I wonder if he took-off the “dingles” sepparately-each??
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NoSleeper
Posted on February 16, 2013 at 6:24amA complicated, excessive and unfair tax system encourages even the honest people to cheat.
How about no federal income tax at all – switch to a national sales tax? No income tax withholding, no filing taxes at the end of the year…taxes paid as you go. Since everyone buys ‘stuff,’ everyone pays; the wealthy buy more, and more expensive, ‘stuff’ and therefore pay more…everyone then pays their ‘fair share’ as ObaMao calls it.
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Mannamomof4
Posted on February 16, 2013 at 12:58amWhen I worked as a tax preparer, the saddest thing I saw were grandparents raising their grandchildren who weren’t able to claim them on their taxes because the drugged up Mommies had filed early returns even though they hadn’t even seen the child all year. But that isn’t the sad part. When the grandparents asked me what could be done, I told them they could contact the IRS and report their kids for filing a fraudulent tax return. “Oh, no! We couldn’t do that. They might get in trouble!” All I could think was, “Here’s your sign.”
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media-bias-steals-elections
Posted on February 15, 2013 at 9:34pmGive me a flat tax instead of income tax please.
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uxpowered
Posted on February 15, 2013 at 6:11pmI used to always just take the $500 maximum deduction for all my donations to a local thrift store. This year my accountant advised me to actually add up the itemized list using their valuation guides. I used to middle to low values on all the items I donated and ended up with $2600 in donations. Definitely worth the time it takes to itemize and value all your donations.
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TotallyNotATroll
Posted on February 15, 2013 at 4:30pmWell, now I’m running a home business and suddenly employing 2 guard dogs
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hslusher
Posted on February 15, 2013 at 4:09pmObviously, Our Government wont be satisfied until they take all money thus removing the need to do income taxes.
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jbcheesehead
Posted on February 15, 2013 at 4:08pmI’m writing off the thousand dollars worth of chocolate angst against Obama has caused me to purchase and eat.
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Saff SGT
Posted on February 15, 2013 at 3:29pmwhat about claiming your gun and the costs for thousnads of rounds of ammo to kill tyrannical Left Wing Communist Muslim Mexicans, I think I covered most of Americas dangers here
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True American66
Posted on February 15, 2013 at 2:40pmThe biggest sham ever pulled on the American people is the one where we allowed elected officials to make our tax code so arduous that we now have to pay other people to figure out our taxes for us….We actually spend money trying to comply with our own tax code.
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soybomb315_II
Posted on February 15, 2013 at 2:08pmgo with the flat tax and all these stupid questions go away
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