In fourth quarter 2011, MNCPA surveyed members to identify the most creative tax deductions proposed by clients. Survey results are being shared with the media as part of the MNCPA’s tax campaign promoting hiring a CPA for tax preparation.

Following is the MNCPA list of strange deductions for 2011. It’s a good bet that many of these deductions would have triggered a letter from the IRS had a CPA not intervened and encouraged the tax filers to not include them on their returns.

1. Questionable dependents. One woman wanted to include the months she was pregnant, even though she relinquished rights upon the child’s birth; another taxpayer wanted to claim his elected official because he “pays his salary;” and one taxpayer wanted to claim a former spouse.
2. Charitable donations? The market value of whole blood that the taxpayer donated; a $100,000 deduction for burning down an old cabin; gambling losses; private school tuition; and raffle tickets.
3. “Fido” as a business expense. Pets proved popular with taxpayers wanting to deduct everything from pet food to vet bills.
4. Inflated mileage calculations. A handyman proposed taking a $25,000 mileage deduction, even though he had only $10,000 in revenue. He justified it by saying he drove 50,000 business miles in one year.
5. Creative medical expenses. A rental house in Arizona; an in-ground swimming pool without a doctor’s order; a spouse’s drug habit; breast implants and tummy tucks.
6. Investment or not? An attorney’s fees for a divorce, considered an “investment” by the former spouse.
7. Business travel and entertainment deductions. A personal luxury car; three country club memberships; a motor home; and the full cost of a wedding.

MNCPA tax campaign continues throughout tax season

MNCPA continues working with reporters on tax-related news stories using MNCPA members as subject matter experts. Advertising continues throughout February in Minnesota newspapers and online websites, promoting the unique value of working with a CPA and connecting individuals with the MNCPA CPA Referral Service.

MNCPA also completed an email campaign to 10,000 small-business owners and offered MNCPA members free brochures to help spread the word in their communities.

For more information on the 2011-2012 tax campaign, visit www.mncpa.org/taxcampaign.