MNCPA issues annual list of outrageous tax deductions
MINNEAPOLIS (Jan. 14, 2016) -- The Minnesota Society of Certified Public Accountants (MNCPA) recently surveyed CPA members in public accounting on the most outrageous tax deductions clients tried to take on their tax returns. The resulting list shows that, more often than not, clients just don't know which deductions are allowed.
"Our tax code has about 4 million words in it, and it gets altered every year," said MNCPA Chair Nate Albrecht. "For most people, it's not easy bedtime reading."
Tax laws are more complex every year. With changing tax laws at the state and federal level, not to mention the differences between state and federal tax regulations, it is difficult for individuals and small-business owners to stay up to date.
"Right above where you sign your return, it says you have examined the return and, to the best of your knowledge and belief, it is true, correct and complete," added Albrecht. "So, it's ultimately your responsibility to make sure what you file is correct."
This underscores the value of certified public accountants (CPAs). 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.
Here is the MNCPA's list of the strangest -- and unacceptable* -- deductions for 2015:
- Expensive clothing: We all like to look nice, especially for business purposes. But you're expected to arrive to work fully clothed (looking nice is a bonus).
- Baby grand piano: A client, who was a humanities professor, thought he could deduct a piano. Unless the professor was providing lessons as part of a small business, this was not an acceptable deduction.
- Misinterpretations of charitable donation: Unfortunately for one client, gambling losses didn't qualify as a charitable donation to casinos or the Minnesota State Lottery.
- Foot powder for smelly feet: Refer to No. 1 -- expected, and extra attention is a bonus.
- 'Business' boat: One client wanted to depreciate the cost of a large boat because it was used occasionally for client entertainment. You better set sail on that idea.
- Valley Fair season tickets: Unfortunately, amusement parks don't qualify for a day care deduction.
- Cat food and litter: Your cats may be used to keep mice out of the barn, but their bare necessities aren't deductible. In general, pet expenses aren't deductible.
- A wedding to remember: A client wanted to deduct part of his wedding costs because more than half the guests were business-related contacts.
- Keeping yourself rejuvenated: Botox, tanning, nails and the like do not qualify as acceptable deductions.
- Commuting to work: You can get mileage reimbursement either through your work (if offered) or the government for mileage incurred while on the clock and for business purposes, but driving to and from work is not going to stick.
* 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.
Questions about what you can and can't deduct on your taxes? Contact a CPA. Don't have one? Visit www.CPAmeASAP.com, or call 800.331.4288.