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Ransoms • Animal expenses • Body oil • Clarinet lessons • Cosmetic procedures • Elevators • Swimming pools • Tutors • Wedding stuff • Whaling boat repairs
As a general rule, your federal income tax form is one of the last places where you should say, “Heck, let’s try it and see what happens.” The Internal Revenue Service (IRS) isn’t noted for its madcap, devil-may-care attitude. Nevertheless, people do try to take unusual tax deductions. Sometimes the IRS allows them. Sometimes tax court allows them. “Oftentimes, it seems like it’s the IRS denying it and then the tax court allowing it,” says Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting. Here’s a look at 10 of the most unusual tax deductions the IRS has allowed.
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Ransoms
Ransomware is a malicious computer program that encrypts important business information. The hackers demand payment for a key that will unlock the digital data. It’s a big business: In 2021, meat-packer JBS paid an $11 million ransom to regain access to critical computer files, and pipeline operator Colonial Pipeline paid about $4.4 million in a ransomware attack. More recently, a $22 million ransomware attack on a popular insurance billing service temporarily shut down insurance claim processing. Most ransomware attacks are aimed at small businesses, however. You can deduct the cost of a ransomware attack as a business expense, provided you can prove the attack occurred.
Animal expenses
Owning a pet for emotional support may ease your anxiety, but that’s not a legitimate reason for deducting Fluffy’s food, litter and veterinary bills. A bona fide service animal, such as a guide dog used by someone who has a visual or hearing impairment or a physical disability, is another story. The cost to buy, train and maintain (food, grooming, vet care) a service animal under these circumstances is generally deductible as a medical expense, according to IRS guidelines. And if a cat keeps your business free from rats, or a dog keeps your business free from thieves, you might be able to deduct some of the expenses for its care. “If it can be associated with some sort of income, [it] was allowed,” Luscombe says.
Estimate Your 2023 Taxes
AARP’s tax calculator can help you predict what you’re likely to pay for the 2023 tax year.
Body oil
OK, most of us can’t deduct the cost of body oil, no matter how great it makes your skin feel. But what if you’re a bodybuilder? It takes a lot of oil to make your body shine like that, and it’s a legitimate expense for professional weight lifters.
Clarinet lessons
In 1962, a parent deducted the cost of clarinet lessons for her child, says Lisa Greene-Lewis, CPA and tax expert with TurboTax. The reasoning: An orthodontist said it would correct the child’s overbite. The IRS allowed the deduction as a medical expense.
A doctor’s note can help you get some other medical deductions – such as costs of quitting smoking or losing weight. Be sure to document your costs – and get that note from the doctor.
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