10 Outrageous Tax Deductions

The Minnesota Society of Certified Public Accountants (MNCPA) recently surveyed CPA members in public accounting about the most outrageous tax deductions clients tried to claim on their tax returns. The following list shows that, quite often, taxpayers don’t know which deductions are allowed or not.

“Creativity is a beautiful trait to embrace, but there are better places to exercise yours than with your CPA and the IRS,” said MNCPA Board Chair Jeff White. “Tax laws are very nuanced, but many of the deductions our members shared from their clients would create issues with the IRS.”

Determining and supporting deductions is complex for those not well-versed in federal and state rules and regulations, not to mention differentiating between the two. For individuals and small-business owners, it’s imperative to know where to turn for the best possible tax return outcome, with deductions just playing one part.

“Navigating the tax world is difficult, and it’s why working with a certified public accountant is paramount for the majority of Americans,” White said. “CPAs are highly educated, have the most stringent ongoing educational requirements, stay up to date on the ever-evolving tax world, and serve as valuable advisers for tax planning, preparation and other strategic areas.”

CPAs are experts in tax law and the tax code, and can catch changes that may apply to your return, helping you avoid costly errors. They can also help you plan for the current 2018 tax year, which will be affected by the new federal tax law, the Tax Cuts and Jobs Act of 2017.

Here is the MNCPA’s list of the outrageous — and unacceptable* — deductions:

Tummy tuck: One CPA had a client who wanted to deduct an abdominoplasty — more commonly known as a “tummy tuck” — as a medical expense because of the amount of money she had to spend on the procedure. No dice.
Building your dream home: As a contractor, one client talked to their CPA about writing off the cost of building themselves a new house. That one didn’t get off the ground.
All by myself (for lunch): One client tried to claim mileage for 25 roundtrips to a restaurant for lunch with himself. Put a fork in this idea.
Working vacation?: One client tried to deduct expenses for a family vacation to Disney because he “was working the whole time.” Let’s hope Disney hired him — he’s got a great imagination.
Boats (again): A nearly annual addition to this list, one client wanted to deduct his pontoon as an advertising expense because he occasionally took out clients for a cruise. Sunk.
Dental work across the border: This one is a doozy. One CPA had a client who flew to Mexico — multiple times — for dental work and, in their infinite wisdom, thought they could extract the difference via deductions. There was no bridging this idea.
Pools don’t make good offices: Repairs and maintenance to an inground pool, as one client found out, cannot be used as a home office deduction. The CPA had to drown out this idea.
Stretching charity: While helping out family members with monetary gifts is kind, it is, however, not legally classified as charitable donations. Do you think they at least got a receipt?
High-class cleaning: This is a new one. One CPA had a client who wanted to deduct the cost of her fur coat because she wore it to keep warm as she cleaned homes. Talk about a faux idea.
Super Bowl gambling loss: $2. That’s not a misprint. One client wanted to file for gambling loss on a $2 bet on the Super Bowl. While gambling losses can be deducted by following instructions from the IRS, $2 leaves a bit to be desired. Better luck next year.

*Taxes are complicated. Each situation is unique and depends on the facts and circumstances involved. Consult a CPA for information on what may be allowable for your specific situation.