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Wednesday, April 15, 2015

Deducing the Deduction of Unusual Things

"Our new Constitution is now established and has an appearance that promises permanency; but in this world nothing can be certain, except death and taxes."
- Benjamin Franklin

So, welcome to tax day, Americans!  Today is the very last day that you can file your tax returns without getting a penalty. 

Fear not, fellow Canadians.  We still have fifteen days to do ours, as our official tax day is April 30.

Of course, with myself being a huge procrastinator and knowing full well that any chance of a refund that I might get is slim to nil, I purposely wait until the last minute to file mine.  I suppose that I would feel differently about it if I knew that I would be getting a tax refund worth three thousand dollars or something like that, but I'm already going on the conclusion that this year, at least, it won't happen.

(But, I suppose getting no refund back is better than being audited.  That would suck.)

Now, I don't really know how the system works in Canada - I am assuming that it is similar to the United States - but one way to make sure that you wake up the day after Tax Day happy is to try and find as many tax deductions as possible.  A tax deduction can reduce the amount of taxes that you have to pay the government, and typically speaking, the more tax deductions you have, the better chance you have of turning a profit on Tax Day.

Some of the most common tax deductions that people have made include caregiver allowances, babysitting expenses, charitable donations, and medical expenses.

Sometimes, people have gotten a little bit creative in trying to deduce whether a deduction is possible, but most often than not, it works out well.

That being said, there is a limit to how much "creativity" that the Internal Revenue Service and the government is willing to take.  And after doing a little bit of research online, I've found some of the craziest things that some people have actually tried to claim a tax deduction on.

The craziest thing about some of these?  They actually WORKED!

I'll highlight the ones that succeeded in green, and the ones that didn't work in red.  That way, some of you will know what you could potentially get away with, and what you definitely will NOT get away with!

Special thanks to,,, and for the information presented in this blog today.

1.  Claiming a dog (or any pet) as a dependent

I know that for most of us, our pets are our lives.  I know many people who see their furry friends as their children, which is very cool indeed.  But just because Fluffy, Fido, or Grumpy Cat may be like having a child, don't confuse them for actually being children. As of 2015, pets can not be declared as dependents.  Some may consider it unfair, but I don't work for the tax collectors.  I don't make the rules.

2.  Claiming a tattoo as a medical expense

Now, when I think of medical expenses, I tend to think of emergency surgical procedures, or certain kinds of prescription drugs - especially in countries in which people have to pay out of pocket to get medical care.  That being said, tattoos and body piercings are not generally considered to be tax deductable.  However, running your own tattoo shop?  That could work.

3.  Claiming sex as a medical expense

This should be common sense, but one person in the state of New York decided that he would at least attempt to make sex a tax deduction.  He tried to claim over $113,000 of "therapeutic sex".

And just what expenses go into "therapeutic sex"?  Well, massage therapy, pornography, and hiring a whole lot of prostitutes, that's what.

There's just one problem.  The tax return was filed in 2002 - and at least back in that time (and very well could still be in effect thirteen years later), prostitution was illegal in New York state.

And, can't claim a deduction on an illegal activity.

4.  Claiming cat food as a legitimate business expense

Yes, this is one of the loopholes in the tax code.  You can't claim a cat as a dependent, but one junkyard successfully claimed cat food as a business expense.  You see, the owner of a junkyard is expected to deal with his fair share of rats crawling around.  But when the rat population grew too large, he started buying crates of cat food and opened them up to attract feral cats in the area.  The cats would be attracted to the cat food, and would be treated to a nice healthy dose of rats for dessert.  The junkyard became more attractive to bargain hunters, and because it improved his profits, the government decided to allow the deduction.

5.  Deducting the cost paid to an arsonist paid to torch a business

As if premeditated arson wasn't enough of a crime, one furniture business owner learned the hard way that deducting the ten thousand dollar fee used to pay the arsonist for destroying his own business was probably not the brightest idea.  He was eventually caught, and both he and the guy he paid off served time in prison.

Basic rule of thumb - Don't do stupid things.

6.  Deducting the cost of breast enhancement surgery

Yeah, remember how I said that tattoos and piercings were not tax deductible?  Apparently if you can prove that a breast enhancement actually allowed you to earn more money in tips and that the enhancement was a necessary "stage prop" to help her perform...well, that can be written off!  Don't believe me?  Just google the name Cynthia Hess.

7.  Deducting the cost of fancy dresses

This really happened in the case of entertainer Dinah Shore.  However, there was a catch.  She could only write off the dresses provided that the dresses were so tight that she could only wear them on her television show.  Since Shore only wore the dresses on her show, they were considered a business expense.

8.  Deducting the cost of pole dancing classes

No, you cannot deduct the cost of installing a pole inside of your bedroom to justify the fact that dancing on a pole helps your husband relax.  But believe it or not, someone tried it!

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