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Updated Oct 23, 2023

Crazy Tax Deductions That Are Actually Legal

Just because a deduction sounds crazy doesn’t mean someone hasn’t tried to deduct it — and succeeded.

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Matt D'Angelo, Business Operations Insider and Senior Writer
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Every year, as tax season rolls around, business owners across the country wonder what deductions they can claim on their tax returns. Certain companies and individuals have come up with some surprising, creative deductions that have been accepted by the IRS or United States Tax Court. These tax deductions may or may not apply to your business but, as tax deadlines approach, it’s worth seeing if the absurdity of some business laws can work in your favor.

Tips for claiming deduction

To avoid getting in trouble with the IRS, follow these dos and don’ts when preparing your taxes and claiming deductions.

Do:

  • Research the tax code, hire a certified public accountant or consult a tax professional before you take any deduction for which you are not certain of the legality or your qualifications.
  • Keep good records to substantiate your expenses and why they should be deductible.
  • Think about taxes year-round so that you can properly plan and take advantage of all tax-saving opportunities, crazy or not.

Don’t:

  • Spend more money than you can afford just because something is deductible.
  • Assume something is always deductible because the IRS allowed it at one time.
  • Get carried away taking questionable deductions — you don’t want to trigger a tax audit or get into arguments with the IRS.
Did You Know?Did you know
Although it may be tempting to add documentation and explanations about certain tax deductions, don’t bother. Anything other than the required paperwork sent with your tax return won’t be read.

Take all the tax deductions you deserve

One person’s crazy deduction is another person’s legitimate business expense or other deduction. The critical thing to learn from this list of crazy deductions is that you should examine every expense that may qualify as a deduction before you dismiss out of hand that it’s not. You are obligated to pay taxes, but you are not obligated to pay more than you legally should. Check out your past and planned expenditures and see if you can come up with deductions that aren’t so crazy after all to help you reduce your tax liability.

Sally Herigstad contributed to this article. Source interviews were conducted for a previous version of this article. 

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Matt D'Angelo, Business Operations Insider and Senior Writer
Matt D'Angelo has spent several years reviewing business software products for small businesses, such as GPS fleet management systems. He has also spent significant time evaluating financing solutions, including business loan providers. He has a firm grasp of the business lifecycle and uses his years of research to give business owners actionable insights. With a journalism degree from James Madison University, D'Angelo specializes in distilling complex business topics into easy-to-read guides filled with expertise and practical applications. In addition, D'Angelo has profiled notable small businesses and the people behind them.
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