Common — and outrageous! — attempted tax deductions
March 13, 2024 | Julia Shiota
Another year, another tax season — and another round of clients attempting to deduct items that definitely 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 clients may get confused about what they can and can’t deduct.
Here are some themes behind commonly attempted deductibles shared in the annual MNCPA Tax Survey of members; some of these might look familiar to you, too!
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 a client uses is a write-off.
Even if someone works from home, a $100,000 addition to a 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 in favor of this approach. 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 a client works with their spouse — or another family member — and spends 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 with business and, therefore, would be eligible for a write-off. Unfortunately, wearing clothing (and looking nice) for work is an expectation and can’t be written off.
That being said, there are several types of office necessities that can be deducted. However, slippers that a client wears in the office are not something to deduct — even if they 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 clients 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 discovered 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 listing a dog as head of security will get a few laughs, it won’t get the client a write-off.
Thank goodness for CPAs!
You can’t help but admire the creativity — and even some of the reasoning behind — a few of these attempted deductions.
As humorous as many of these examples are, they go to show how important your role as an adviser is to your clients, whether they are businesses or individuals. Taxes are complicated and each taxpayer’s situation is unique and will depend on the circumstances involved.
Without your guidance, it’s easy to see how some of these clients may get lost in the weeds of tax filing.
Topics: Clients, Taxation-Individual, Accounting & Auditing, Taxation-Business
Julia Shiota
Julia Shiota is the MNCPA’s communications coordinator, bringing her passion for storytelling to members through content development, media relations, and covering member accomplishments and events. Outside of her work with the MNCPA, Julia enjoys knitting, reading, and keeping track of all the birds she encounters on nature walks. You can reach Julia at 952-855-5533 or at jshiota@mncpa.org.
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