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We're From the IRS & We'd Like to Ask you Some Questions: Weird Tax Deductions You Should Avoid Claiming

We're From the IRS & We'd Like to Ask you Some Questions: Weird Tax Deductions You Should Avoid Claiming

Spatulas? Hair plugs? Really?

You wouldn’t believe some of the things people try to claim as tax deductions. Spatulas? Hair plugs? Really?

“Wait! Those don’t count?”

Personally, we follow the "if it feels like a stretch, then it probably is" rule. But maybe you have something out of the ordinary that you think is a legitimate deduction and you want to claim it. That’s your prerogative. Just know this: if it is a stretch, it could be illegal, which means you could face “the serious possibility of having the Internal Revenue Service scour your financial background with a fine tooth comb," according to Chad Brooks of BussinessNewsDaily.

On the other hand, even what might seem like the biggest stretch could turn out to be 100 percent legal (okay, so our rule isn't perfect). But make sure you know which deductions are legitimate before you try to claim them.

“Do not try these stunts on your own tax return,” writes Jay MacDonald of bankrate.com, “The Internal Revenue Service, while generally jovial sorts, won't let laughter stop them from tossing your return into the red flag file reserved for the scofflaws, pranksters and disoriented filers among us.”

"Ha! Ha! This guy's totally going to prison!"

And in case you are wondering which weird tax deductions we’re talking about, bankrate.com has compiled a list of the strangest – and sometimes illegal – deductions claimed in 2012.

Here’s a list of the best (worst?) of 2012 [as compiled and written by Jay MacDonald]:

Hair transplant: Most accountants are quick to notice when a client tries to shave a little off his or her tax bill. But Laura Cullen, a CPA in Fresno, Calif., admits even she did a double take when a new client tried to pull the hair over her eyes.

"We had a client that had been transferred to the U.S. from another country. He was an educated, likable, sharp guy," she recalls. "The first year I did his personal tax return, being aware that you could itemize your medical expenses, he asked me to expense his hair transplant. I had a heck of a time explaining why I couldn't."

Live-in boyfriend: The changes to the traditional American household, played for laughs on the hit TV comedy "Modern Family," also make for some jaw-dropping -- and allowable -- tax deductions, according to Los Angeles forensic accountant Susan Carlisle.

"As I do most of my work in divorce, I was surprised to find that a husband, who had left the family home to live with his gay partner, (listed) both his wife and the partner, along with his children, as dependents on his tax returns in the same year prior to being officially divorced," she recalls. "In all likelihood, each one -- wife, live-in boyfriend and kids -- met the definition of dependents."

The wife and kids, sure. But the partner? It turned out the husband could claim the live-in boyfriend as a "qualified relative" since he: shared the same residence, was a member of the husband's household, earned less than the exemption amount ($3,700 for 2011), and derived more than half of his total support from his new partner, Carlisle says.

Modern families, modern tax laws -- hey, it's complicated.

Swimming pool: Clients have long tried to talk Los Angeles CPA Rob Seltzer into allowing them to deduct their new swimming pools, but the strangest argument of all actually won over the IRS.

"My client was a very active individual and then incurred a severe back (and) neck injury," Seltzer recalls.

"After he had surgery, his doctor determined that swimming was the only form of exercise that he could do without risking further damage. In addition, if someone inadvertently collided with him while he was swimming laps, he could face reinjuring himself. So the only option that could give my client a safe form of exercise and rehabilitation was in his own lap pool. My client built the pool, a deck and a Jacuzzi, and we deducted the portion of the total cost that was attributable to the lap pool."

That would explain the absence of a passing lane.

Spatulas: Uncle Sam allows us to deduct the money we spend on the tools of our trade, within reason. For instance, if you have a home office, you'll likely be able to claim expenses for things such as a computer, a printer, copy paper, furnishings and a helipad. Well OK, maybe not the helipad.

But Gail Rosen, a CPA in Martinsville, N.J., was blindsided by one eye-popping expense on a client's return.

"My client is a painter, and he gave us his airfare to Brazil as a deduction," she recalls. "When I questioned the airfare, he said he went to Brazil to get spatulas."

Prayer room: Tax season may cause some of us to pray for deliverance, but one taxpayer took it one step too far with this now-former CPA, who requested anonymity.

"This client was in the fitness business. As we were going through his return, he says, 'Oh, and I built a prayer room that I'd like to take as a charitable deduction.' At first I thought he was joking, like OK, we'll take the bedroom and the swing set outside, too. But he was dead serious."

"I said, 'Well, it's in your house, right? And you're not a minister. So unless your religion is kind of unique to you and it's a recognized charity or church, those payments come out of your own pocket.' He got quite angry when I said there's just no way, dude."

"It's pretty straightforward: Just because people take their shoes off when they enter doesn't make your house a temple."

See the rest of the list here.

(H/T: Business Insider)

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