You have some tax-related humor prepared for us today?
It’s hard to think there’s anything funny about taxes when you’re under a mountain of paperwork, but I do have a bit of comic relief for you today! I did some research about the craziest tax-write offs the IRS has allowed—and some ridiculous things people have tried and failed to slip by the IRS—and you’re not going to believe some of the things I dug up!
You’d be amazed about what people try to write off concerning their pets, and it’s no wonder why—they’re expensive! According to the ASPCA, dogs and cats both cost over $1,000 a year. One woman claimed an unusually high amount of medical expenses for a dependent, but she didn’t have a spouse or any children. Turns out the “dependent” was her dog. Her accountant set her straight that if it’s covered in fur, you can’t claim it as a dependent. In general, pet expenses are not deductable, but there are a couple of surprising exceptions.
For instance, you can deduct expenses related to a foster animal if the goods or services are SOLELY for the foster pet AND if the organization is a registered non-profit. That means it has 501(c)(3) tax status. Also, expenses exceeding $250 may require a letter from the organization. In a landmark tax court case, a California woman was able to deduct 90% of the $12,000 in deductions she claimed for the 70 cats she fostered. Seventy cats. But this wasn’t your average crazy cat lady—she was working with a legitimate charity.
Another case in which you can deduct dog expenses? If you own your own business and your dog doubles as a security system. But don’t push it! You can’t deduct expenses for your Chihuahua—If you’re going to claim you employ Fido as a guard dog, you need to be a little bit afraid of him yourself—We’re talking pit bulls and German Shepherds, not a Labrador who greets you at the door with a squeaky toy. You can’t deduct the cost of the dog itself, but related expenses—like food and medical bills—can qualify. The craziest detail? You can depreciate your guard dog over its lifespan as determined by a local breeder. Remember, as with everything tax-related, documentation and receipts are crucial.
What else have you got?
Some people want to get paid for love, and sometimes they actually can. You know that loaf of a boyfriend or girlfriend? They could add value come tax time. To claim a non-relative as a dependent, he or she had to live in your home for the full tax year and make less than $3,800 in gross income for 2012. You also generally must provide more than half of the person’s financial support, and he or she can’t be claimed as a dependent by anyone else.