Unusual Tax Breaks, Tax Deductions, and Tax Exemptions
The United States tax code allows for many unusual but legitimate tax deductions, tax credits, and exemptions. Here is a sampling of some of the more noteworthy unusual tax breaks that have been successfully claimed. Some of these might even apply to you...
Examples of Unusual but Legitimate and Qualified Tax Deductions
1. Are pet moving expenses deductible?
If you lost your job and you are relocating to start a new job, you might know that these expenses are generally tax deductible (you must meet a few requirements). You might not know that the expense of moving your cat, dog, bird, python, or whatever pet you might have from your current or old home to your new home is treated the same as moving your other personal properties.
2. Can clarinet lessons be a deduction?
A parent was able to deduct the expenses for clarinet lessons for her child because she claimed it corrected her child’s overbite. This was based on a 1962 case where an orthodontist argued that playing the clarinet helps correct a child's overbite.
3. Can babysitter expenses be deducted?
A mother claimed her babysitter expenses as a deduction because she was performing charitable deeds while she was away from her child. This would mean that you pay somebody to look after your child while you work for no pay for a charity. In this case the tax court rejected and overruled an IRS revenue ruling when, despite not having the money go directly to a charity, a parent used the baby sitter expense as a charitable contribution while volunteering for a charity.
4. Are private airplane expenses deductible?
A couple owned and rented out a condo that was a 7 hour drive away from their primary residence. To save time and money, they bought a private airplane and were able to deduct airplane expenses, like fuel and depreciation for business use, for the property management trips to their condo. However, it turned out that the expenses increased the overall loss on the rental condo.
5. Is cat food deductible?
Yes, under certain conditions the cost cat food might be considered a legitimate deductible expense. A junkyard owner bought cat food to attract local stray cats in order to drive away mice and rats. He claimed it as a business expense and it was approved by the IRS. The average house cat will likely not qualify because the cat would need to perform some task associated with the upkeep of a business.
6. Can a swimming pool be a tax deduction?
If you have a medical condition that would improve with a swimming pool exercise regimen, your swimming pool expenses might qualify as a deductible medical expense. That's what happened in the case of an arthritis patient who was prescribed to swim frequently in order to treat his condition. He installed a swimming pool on his property and deducted the expenses from his taxes. After some investigation, the IRS approved the deduction, but if the pool were used for recreational purposes, it wouldn't have been approved.
7. Is a sex-change operation a qualified tax deduction?
A man who was diagnosed with gender-identity disorder (he felt he was a woman trapped in a male body) wanted to deduct almost $22,000 in out-of-pocket medical expenses for various surgeries, including hormone therapy, sexual-reassignment surgeries, and breast augmentation, in order to become a woman. Here is what the tax court decided: the hormone therapy and the sex-change operation in the amount of $14,500 was a qualified medical tax deduction. However, the expenses for the breast augmentation was not; it was deemed nondeductible cosmetic surgery by the court.
8. Is quitting smoking a deductible medical expense?
Yes, you might qualify to deduct expenses for smoking cessation programs, nicotine patches, stop-smoking aides, etc.
9. Is the cost of getting in shape deductible?
It is, if your doctor signs off on it, and tells you that your life might be in danger if you don't start exercising and lose weight. The cost for remedies that help you drop a few pounds, improve your heart rate, or reduce your cholesterol might all be deductible.
10. Can a business trip qualify for a tax deduction?
Any business trip viewed as “ordinary and necessary” to the course of doing business by the IRS is eligible for a deduction. In one case, the owner of a dairy took a trip to Africa to conduct research on wild animals, and successfully claimed it as a business expense because it was relevant to his business.
11. Can lawn care expenses be claimed as a deduction?
Yes, they might, but your house will have to be your workplace and the state of your lawn would have to have some relevance to the performance of your business. A sole proprietor successfully deducted lawn care expenses as business expenses because he met his clients in his home office.
12. Can the cost of body oil be deducted?
For one bodybuilder, it worked. He claimed a deduction for the cost of body oil that he used in competitions. The IRS didn’t seem to have any problem with this, as it was a business expense.
13. Can you deduct the cost of beer?
If you are a business trying to attract customers, it might be deductible. A deduction was approved when one business deducted the cost of beer it used to attract customers and promote its business as a business expense.
14. Can whaling boat repairs be claimed as a deduction?
Whaling boats need repairs and, since 2004, captains of whaling boats can deduct up to $10,000 for repairs, equipment purchases, and other expenses associated with the business. However, starting a whaling business to claim a deduction will not work for most people, since whaling is banned by the United States government and only Native American tribes are allowed to engage in it.
15. Can the cost of breast implants be deducted?
In 1994, one stripper's attempt to get more tips led her to undergo breast augmentation surgery. She then proceeded to deduct the expense from her taxes. A tax court judge ruled in favor of the stripper, stating that the implants were a stage prop, and thus a legitimate work expense that can be deducted.
These people saved money by claiming deductions and taking advantage of tax breaks and exemptions. There are many other more practical ways to save money and have more money left over each month.
Strange Deductions, Exemptions, and Tax Breaks from the U.S. and around the World
- In Wisconsin, cloth diapers are not subject to sales tax, but disposable diapers are.
- In Texas, cowboy boots are exempt from the sales tax, but hiking boots are not.
- In Ohio, a corpse in a mortuary gets makeup applied on it without getting taxed, but a living person is taxed for the makeup that gets applied in a beauty salon.
- In South Carolina, one can get a $50 deduction if they donate a dead deer to the poor.
- In Maryland, oyster farmers get a tax break, but those who farm other types of shellfish don’t.
- Hawaii gives a $3,000 tax deduction to those who grow state-approved trees.
- People who were persecuted by the Ottoman Empire between 1915 and 1923 were exempt from taxes in California (learn more about the history of taxes in United States).
- A business owner bought a racehorse and claimed it as a business expense. No, he was not in the horse-racing business; he claimed that he needed to entertain his clients and that a racehorse would do just that. The economic stimulus package allowed for a tax deduction as large as $25,000 to be claimed for buying a racehorse, but the deal expired without creating many new purchases.
- In one case, the use of a yacht was deducted as a business expense because the business owner tried to impress his customers and encourage them to do business. Maintenance and cleaning of the yacht, however, was not allowed to be deducted because the IRS code prohibits it.
- An ostrich farmer in Louisiana’s St. Tammany Parish depreciated his ostrich, which is allowed as long as the birds are used for breeding purposes.
- One man who owned several properties hired his girlfriend to manage them. She looked for furniture for the houses, made sure the proper repairs were made, and managed his home. He was able to deduct $2,500 of the $9,000 he paid her as a business expense.
- A dentist submitted fraudulent insurance claims. When the fraud was discovered, she was ordered to pay the money back as well as serve some time in jail. However, she was able to deduct her repayment to the insurance company as a business expense. That is because the repayment was done to compensate for a loss sustained by the insurance company and was not considered a fine.
- A man was arrested for drunk driving after he waited to sober up--but not for long enough--and wrecked his car. His insurance company refused to compensate him for the wrecked car because he broke the law. The driver, however, was able to deduct the cost of his car as a casualty loss because he acted reasonably. If he hadn't waited to sober up, then it would have been gross negligence and thus nondeductible.
- In 1981, a drug dealer from the Minneapolis area was caught with possession of large amounts of cocaine, amphetamines, and marijuana. He was arrested and later audited. The audit found that he owed $17,000 in taxes. The drug dealer argued that he should be able to deduct a significant amount of the back taxes as business costs incurred by running his business from his home. He managed to get a deduction, but still went to jail for drug possession.
- A man working for a graphic design agency bought a pair of skis from Yamaha Snowmobiles, a company for which he was making a catalog. He used the company discount and then successfully deducted the skis as a business research expense.
- A hair stylist successfully deducted the entire cost of her wardrobe that she wore while working with her clients as a business expense.
- In Germany, one can deduct bribes. While the deduction is seldom used, it does exist as part of the tax code. All one has to do to report it is disclose their name and the name of the official that they bribed.
- The United Kingdom gives tax breaks to video game companies that create "culturally British" games. The criteria for being culturally British is not very clear; the game must score 16 or more of 31 points on a test that was designed to measure the cultural content and contribution of the game.
- In the Netherlands, those who study and practice witchcraft can claim a tax break given out by the government. It has existed for quite some time, but in 2005 it gained the attention of the public after a judge upheld the tax break in court.
- During the 2010 FIFA World Cup in South Africa, stadiums and the areas surrounding them were exempt from the value added tax as well as the income tax from profits. This allowed FIFA to keep more of the money to itself. Critics didn’t like this measure because it deprived the government of South Africa from tax revenue associated with the World Cup matches.
- In Italy, almost a third of all men over 30 still live at home. To encourage them to move out, the government issued a 1,000 euro tax break to those who rent their homes. However, the problem is considered to be tied to the difficult job market in Italy that prevents young men from obtaining jobs that will support their independent lifestyles, so critics say it’s unlikely that the tax break will encourage many young Italian men to move out.
Did you like this list of strange and unusual tax deductions? You may enjoy reading about strange, funny, and unusual taxes from the United States, from around the world, and throughout history.
Learn about the evolution and history of 1040 Form.
Detailed overview of tax history in United States and the world.