As your clients look at getting their financial houses in order, here are some unexpected tax deductions they may be able to claim on their returns. This is written for the taxpayer, so copy and paste this information to send to your clients.
Unexpected Business Deductions
Business travel (including exotic places). If you need to travel out of town for business, the cost of getting to and from your destination and any business related expenses when you’re at your destination can be deductible. To be allowable by the IRS, the travel expenses must be considered reasonable and not lavish or extravagant. Attending business conferences in exotic locations, such as Hawaii or the Caribbean Islands, are allowable if they are reasonably justified.
Driving to a class. If you drive to an educational class, you may be able to deduct the standard mileage rate (53.5 cents a mile in 2017) for the cost of commuting. If the education meets the following conditions, you would be able to take the deduction on Schedule A (if itemizing) or Schedule C.
- Required by your employer or by law to keep your present salary, status or job;
- Maintain or improve your job skills; and
- Don’t qualify you for a new trade or business
Guard dogs. If you have a guard dog to protect your business from robberies or break-ins, you’re allowed to deduct any expenses necessary to take care of the guard dog.
Cat food and related expenses. If you have a business and your cat provides pest control, you may be able to deduct some of the expenses. To qualify, the expenses must be reasonable and directly related to the business. One couple claimed a deduction for cat food to feed wild cats that were used to keep their junkyard free from snakes and rats. The taxpayer won the case in Tax Court.
New Year, New You
Cost to stop smoking. You can include medical expenses amounts you pay for a program to stop smoking. However, you can’t include in medical expenses amounts you pay for drugs that don’t require a prescription, such as nicotine gum or patches, that are designed to help stop smoking.
Cost of getting in shape. Let’s say your doctor tells you that your life might be in danger if you don’t start exercising and lose weight. The cost for remedies that help you drop a few pounds, improve your heart rate or reduce your cholesterol might all be deductible. You can’t include in medical expenses the cost of a weight-loss program if the purpose of the weight loss is the improvement of appearance, general health or sense of well-being.
Swimming pools. If you have a medical condition that would improve with a swimming pool exercise routine, your swimming pool expenses might qualify for a medical expense deduction. There is a case involving an arthritis patient who was prescribed to swim regularly to help treat his condition. The IRS allowed installation and expenses associated with the swimming pool. Pure recreational use of the pool would not qualify, however.
Managing Your Family Expenses
Clarinet lessons for your kids. If your child has an overbite, you may want to enroll him or her in clarinet lessons. Both the clarinet and the music lessons are deductible thanks to a 1962 provision. Orthodontists argued that playing the clarinet helps with a child’s overbite and thus may qualify as a medical expense.
Salary you pay your kids. If you pay your kids to help in the office over the summer, you can deduct their salary as a business expense. The added benefit here is that you’re able to move the money from a higher tax bracket of the business to the lower rates of your kids.
Cost of moving your family pet. Regardless of the type of pet you have, your pet is considered a personal effect. You’re allowed to deduct reasonable expenses of moving your household goods and personal effects and of traveling from your old home to your new home. The move must be related to the start of work at a new principal place of work.
As with all tax deductions, be sure to document and retain receipts for any expenses claimed on your tax return, and please engage the services of a tax professional if necessary.
Editor’s note: This article originally appeared in CPA Practice Advisor.