March 22, 2012
Deductions Are an Important Part of Tax Strategy
A smart tax strategy means looking for all of the legitimate deductions that may benefit you. Even if some of them seem downright silly, it’s still important to know about the ones that may apply to you.
After all, there is big difference between using deductions intelligently, on the one hand, and criminal tax evasion on the other. Deductions help you to avoid more tax than you have to, which is perfectly legitimate.
So what are some of the more unusual deductions?
Consider, for example, a professional bodybuilder who needed to use loads of body oil during competitions to make his rippling muscles gleam. He claimed a tax deduction for the oil. When the IRS questioned the deduction, the bodybuilder took the issue to tax court – and won.
It’s also worth noting that the rules on deductions for medical expenses are often quite expansive. In one case, a taxpayer with emphysema installed a home swimming pool because his doctor had ordered an exercise program. Regular swimming in the pool enhanced his breathing ability.
The U.S. Tax Court found that the man could legitimately deduct the cost of the pool as a medical extent. The exact amount of the deduction had to be reduced by the amount that the presence of the pool increased the value of the property.
The tax deduction for the pool was valid, however, because the primary purpose was medical care.
These are only two examples. An experienced tax attorney can help you consider others that may apply in your specific case.
Source: “Still More Strange Tax Deductions,” Robert W. Wood, Forbes, 3-21-12