Don't Mess With Taxes

A candy-seeking skeleton goes trick-or-treating on Halloween. (Photo by Don Scarborough via Wikipedia Commons)

OK, that youngster dressed like an Internal Revenue Service auditor might freak you out when you open your door the evening of Oct. 31.

I apologize (sorta) for suggesting such a non-traditional Halloween costume in my previous post on how scary our taxes and the agency that collects them can be.

But it's not all tax ghouls and goblins this spookiest part of the year.

There are some tax treats that are available, too.

Here are five tax benefits you might be able to take advantage of this All Hallows' Eve or soon thereafter.

1. Donate excess candy: There are many ways you can get rid of all that uneaten candy temptation and possibly save on your tax bill. You can donate it to the military, your local hospital, homeless shelters or food banks. As long as these recipient groups are Internal Revenue Service-approved 501(c)(3) organizations, your gift is a tax-deductible donation.

2. Give old costumes to charity: Just like the candy donations, other Halloween-related contributions have tax benefits, too. If the kids — or you; this is why you want to give away that candy! — have outgrown your Halloween costumes, don't throw them out. Give them to Goodwill or other nonprofits that accept clothing donations. Again, the fair market value of these items is tax deductible if you itemize and donate to an IRS authorized charity.

And although it won't get you a tax break, you might want to stop by your local nonprofit thrift shop to look for a costume. I'm sure it would appreciate the business.

3. Throw an office party: Speaking of businesses, holidays offer a great way to build morale and camaraderie while providing the boss a tax break. Throw your staff an Oct. 31 themed office party this week and it's a tax deduction for your business.

Yes, that tax break survived the Tax Cuts and Jobs Act (TCJA) business breaks changes. While the new tax law does tighten certain deductions for business-related meals and eliminates the deduction for business entertainment altogether, it left the exception for certain business activities, including office parties.

Office holiday parties remain fully deductible, and are a nontaxable benefit to the workers, as long as they're primarily for the benefit of a company's rank-and-file (not just executives) and their families. One of my earlier posts has some tax tips on throwing an office party.

But if you just can't pull a party together this week, don't despair. December's holidays will be here before you know it. Yep, those Christmas decorations are poised to bump all the Halloween candy off store shelves on Nov. 1!

4. Buy non-sweet treats: You probably paid state and possibly local sales tax on your trick-or-treat candy. Most jurisdictions, however, don't tax food.

While the kiddies coming to your door might not like those boxes of raisins you drop in their bags, it's healthier for them and such alternative treats could save you some tax money.

Those pumpkins on the porch probably also were deemed a food product, making them tax-free, or taxed at a lower rate, even if you didn't use the jack o'lantern insides to make pies.

5. Use your health care benefits: Halloween offers many health and safety challenges. There's always the annual splurging on Halloween treats and subsequent upset stomachs, for the candy-collecting kids and their parents! And I know more than a few folks who've had some accidents putting up or taking down their Oct. 31 decorations.

These situations could be severe enough to require medical treatment at a doctor's office or emergency clinic. That's when health care coverage comes into play, both for the holiday-related treatments and your taxes.

If you get your medical insurance through work — and millions of Americans are making those benefit choices this time of year — it's likely a tax-free benefit. If you pay for your coverage all on your own, you can claim those medical insurance premiums as medical expenses if you itemize.

There, those tax treats weren't scary at all.

And again, these tax breaks apply year-round, not just Halloween.

You also might find these items of interest:

• Deducting ordinary and necessary business expenses
• 5 ways to determine whether a charity is naughty or nice
• Hungry for some football watching food? Your Super Bowl party budget better include party snack taxes

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