Common — and outrageous — attempted tax deductions
CPAs reflect on the oddest attempted deductions
MINNEAPOLIS (March 15, 2024) — Another year, another tax season — and another round of clients attempting to deduct items that, it turns out, aren’t allowed!
These deductions are usually made without any nefarious intent behind them. With tax laws becoming increasingly complex and seemingly always changing at either the state or federal level — and sometimes both — it’s no wonder that taxpayers may get confused about what they can and can’t deduct.
Here are some themes behind commonly attempted deductibles we saw from an annual Minnesota Society of CPAs (MNCPA) survey of our members.
Mixing work and play
The line between personal and business expenses can be blurry, especially considering the impact of things like the pandemic and the shift to remote work. But that doesn’t mean everything you use is a write-off.
Even if you work from home, a $100,000 addition to your personal home will not count as a direct home office expense. Likewise, writing off an RV or motorhome as a business office or a place of work isn’t going to work either — though some clients have attempted to make some good arguments. One member mentioned a client framing their brand-new RV as a business expense, so they didn’t need to pay for hotels when they travelled for business. The only problem was that the client never needed to travel for work!
Another common theme members see over the years is writing off family vacations as business trips. Even if you and your spouse — or another family member — work together and spend some part of the trip talking business, deducting the vacation is a no-go.
As one member put it: “Some people seem to think if they drive, travel or eat that everything is deductible!”
Office ‘necessities’
It’s common to see clients trying to deduct things like clothing, manicures, hair styling or shoes as business expenses. It makes sense to think that looking your best will help your business and, ultimately, would be eligible for a write-off. Unfortunately, wearing clothing (and looking nice) for work is an expectation and, therefore, can’t be written off.
That being said, there are several types of office necessities that can be deducted. However, slippers that you wear in the office are not something you can deduct — even if you only wear these slippers in the office. A brand-new Coach purse will, sadly, also not count as an office supply.
These are important distinctions for many to keep in mind, but this is especially true for business owners.
“Personal expenses don’t always count just because you created an LLC,” said one member.
Deductions for ‘employees’
Another common attempted deduction that members see each year has to do with pet expenses, particularly for vet bills or the cost of having someone dog sit. However, some of these attempted deductions put more of a unique spin on things.
One member mentioned seeing a deduction for “mouse control” at a hotel and resort. After some digging, they found out this referred to food for the mouse-controller-in-chief — the family cat.
Another client listed the cost of a watchdog as a business expense. While it might be tempting to list a dog as head of security, you won’t be able to deduct the cost.
Speak to a CPA today!
Although the experts agree that trying to take these as deductibles isn’t going to work, you can’t help but admire the creativity — and even some of the reasoning behind — of a few of these attempted deductions. It’s important to remember that taxes are complicated. Each taxpayer’s situation is unique and will depend on the circumstances involved.
It’s important to consult a CPA for information on what may be allowable for your specific situation; they are the experts who will be able to guide you through the process and make sure you do your taxes the right way!
Learn more about how a CPA can make a difference for you year-round and connect with a CPA in your area by visiting www.mncpa.org/find-a-CPA.
The MNCPA serves the public interest by advancing the highest standards of ethics and practices within the CPA profession. The MNCPA delivers on that promise by offering extensive continuing professional education and resources; advocating for members and the public with regulatory agencies and boards; and mentoring and encouraging the CPAs and business leaders of tomorrow. Founded in 1904, the MNCPA has 7,500 members who work in public accounting, business and industry, government and education.
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