Slippery attempts to slip one past the IRS
Thursday, March 09, 2006
In Mauled Again, James Edward Maule's "tax and other stuff" blog, we have word of a "personal grooming expense deduction."
It seems, says Maule, that a purported tax expert announced this tax break to readers of Costco's monthly newsletter, February edition. The only problem, notes Maule, is that there is no such deduction for U.S. taxpayers.
Maule, a professor at Villanova University School of Law, is rightfully concerned about the bad tax info floating around the blogosphere. Too many people take what they read on the Internet and elsewhere as gospel and run with it. They could run smack dab into tax trouble.
Whenever it comes to all the tax advice you discover, it's always a good idea to know who's giving it out and what credentials they bring to their words of tax wisdom. You can read about me here.
Also keep in mind that personal circumstances can affect application of tax laws. So if you've got an issue that is particularly convoluted, it's probably worth the price to pay a pro to look it over.
Some people, however, ignore sound tax advice, whether it's the free tips found here on Don't Mess With Taxes and other reputable tax blogs and sites, or the personal recommendations of a paid preparer. These folks don't care about legal; they just want a lower bill by any means.
And that generally means trying to slip a questionable deduction or other tax-cutting claim past the Internal Revenue Service. Taxpayers have been trying such tricks for as long as Uncle Sam has been collecting some of our cash. Just check out the wacky tax relief attempts in this story.
H&R Block has put together its own collection of off-the-wall deductions. The tax prep firm even found a few unusual ones that the IRS actually allowed, such as the exotic dancer who successfully argued that her specific cosmetic enhancement was a legitimate business expense and parents who got approval to deduct their child's clarinet lessons as a medical expense because it improved the youngster's overbite. (Why do I now hear the voice of my junior high band director yelling, "Embouchure, embouchure!"?)
But such exceptions are rare. Most of the time, the IRS nixes wacky deductions. So don't try them unless you're ready to make your argument for the claim to an IRS examiner.
Anyway, you might not feel so compelled to make up deductions if you use the genuine ones that already exist. Many of these valid tax write-offs are routinely overlooked by filers every tax season.
Take medical costs, for example. Travel to and from medical treatments is deductible at 15 cents a mile for most of 2005; it was hiked to 22 cent a mile for the last four months of the year and dropped to 18 cents for such travel in 2006 (the changes are based, in part, on gasoline prices). So the parents who got the clarinet lessons OK'ed also probably counted the miles they drove their budding Pete Fountain to and from music class and wrote them off, too.
This is just the kind of write-off that could get your medical costs over that 7.5 percent threshold so that you can claim them on Schedule A as an itemized deduction.
There are other such often-overlooked medical costs -- some insurance premiums you paid, stop-smoking treatment costs, structural changes to your home to make it accessible for a physical ailment or disability -- that could quickly add up and become tax deductible.
And that's just deductions listed in the very first section of Schedule A.
If you look at the rest of this form, you'll see lots of opportunities to write off stuff, including other taxes you paid, costs you incurred due to a disaster (either natural or of another, equally costly, nature), charitable gifts beyond simply checks to your favorite charities and a fun section that has that intriguing word "miscellaneous" in it.
Some deductible miscellaneous examples: job-hunting costs, unreimbursed expenses you paid on that job you're trying to get out of, expenses related to your investments. Heck, even the costs of doing your taxes can be deducted here.
TODAY'S TAX TIP: You'll find details on these various, legitimate itemized deductions in this story I wrote for Bankrate.com.
And you don't even have to itemize to claim some tax breaks.
Contributions to retirement accounts, some educational expenses, even alimony payments you shelled out to the ex can be claimed without messing with a Schedule A. You can find details on these breaks in this other Bankrate story I wrote.
Check them both out and start cutting your tax bill, without upsetting the IRS, now!
Addendum March 14: It's Carnival time! This post was selected to be part of Festival of Frugality #14. Check it out for more ways to save your hard-earned money.
I am sorry for the delay in getting this released. Your submission has been included in this week's Festival of Frugality at the following URL:
Posted by: Neo's Nest Egg | Tuesday, March 14, 2006 at 02:32 PM