Those needing last-minute tax deductions should avoid including this year's breast augmentations and swimming pool installations or face the serious possibility of having the Internal Revenue Service scour your financial background with a fine tooth comb, according to Bankrate.com.
Those items make the online financial information site’s latest list of craziest real-life tax deductions, released annually as a warning to Americans about stunts that don’t pay off. This year’s installment includes:
- Hair transplant — Laura Cullen, a CPA in Fresno, Calif., admits she did a double-take when a new client tried to deduct his hair plugs.
"The first year I did his personal tax return, being aware that you could itemize your medical expenses, he asked me to expense his hair transplant," Cullen said. "I had a heck of a time explaining why I couldn't."
- Live-in boyfriend — Los Angeles forensic accountant Susan Carlisle was surprised to find that a man who had left the family home to live with his gay partner listed both his wife and the partner, along with his children, as dependents on his tax returns.
It turned out the husband could claim the live-in boyfriend as a "qualified relative" since he shared the same residence, was a member of the husband's household, earned less than the exemption amount and derived more than half of his total support from his new partner, Carlisle said.
[The 5 Biggest tax Myths Debunked]
- Swimming pool — After years of clients trying to deduct swimming pools from their tax returns, Los Angeles CPA Rob Seltzer said the strangest argument of all actually won over the IRS.
His client, who had a severe neck and back injury, claimed his only form of exercise was swimming.
Since he risked further damage if he collided with another swimmer, the only option offering Seltzer's client a safe mode of rehabilitation was the use of his own lap pool.
- Spatulas — While the IRS does allow for some deductions for employees who spend money on the tools of their trade, Gail Rosen, a CPA in Martinsville, N.J., was blindsided by one client who took things a bit too far.
"My client is a painter, and he gave us his airfare to Brazil as a deduction," she said. "When I questioned the airfare, he said he went to Brazil to get spatulas."
- Prayer room — One CPA who wished to remain anonymous recalled a client attempting to take a charitable deduction on the prayer room he built inside his house.
The client became angry when he was told the deduction wasn't possible since he wasn't a minister and his religion wasn't a recognized charity.
"It's pretty straightforward," the anonymous CPA said. "Just because people take their shoes off when they enter doesn't make your house a temple."
- Breast enhancement — A Dallas woman was disappointed to learn the $14,000 she spent on breast augmentation was not a deductible expense.
After saying she spent that much only because she thought the new additions were deductible, the CPA had to explain to her client that there was no way it could be considered a business expense.
"There are only one or two professions that are allowed to write those off, and there's no pole involved here," the CPA said.
Chad Brooks is a Chicago-based freelance writer who has worked in public relations and spent 10 years as a newspaper reporter and now works as a freelancer business and technology reporter. You can reach him at firstname.lastname@example.org or follow him on Twitter @cbrooks76.