We have our winners! Congrats to edmontonjb and Linda!
I’m having a pretty amazing day. The good folks at Time asked me to write a couple of pieces for their site; those pieces were posted today and the one that I wrote about divorce is, as of this writing, the most read article on Time.com today. The other piece, which was the headline on the page for a bit, is a special package on the 10 Riskiest Tax Moves you can make.
I enjoyed writing both of the pieces immensely but the last one really got me thinking about the kinds of crazy things that taxpayers try to pull off at tax time – sometimes intentionally, sometimes not. So with that in mind, I’m having a giveaway!
I contacted the team at Nuts (since I just received a delicious stash from them yesterday and I totally have nuts on the brain) to see whether they would be interested in working with me on a giveaway. I am delighted that they agreed to donate two mixed nuts samplers for the giveaway: one for each of two commenters. Each sampler contains a delicious sampling of Jumbo Cashews – roasted and salted, Honey Roasted Peanuts, Chocolate Covered Cashews, and Chocolate Covered Raisins packed in a clear one pound plastic container. Yum, right?
It’s easy to enter to win. In the comments below, tell me about the nuttiest tax move you’ve ever tried or heard about – they don’t have to be successful or make sense. In fact, the nuttier, the better! I’ll choose two winners randomly (using a number generator) out of all of the qualifying entries.
Here are some more rules because, as you know, I’m a lawyer and I like rules:
- Entries must be posted in the comments section on the blog below by 11:59p.m. EST on April 8, 2011. Don’t panic if your comment doesn’t show immediately. If it goes to moderation because, for example, you’re new here, the time stamp on your comment is what counts.
- I love my Twitter followers and my Facebook friends (muah!) but for this particular giveaway, tweets and Facebook comments will not be counted.
- Due to shipping considerations, only those residents of the US and Canada (how about that, eh?) are eligible to win.
- You can enter as many times as you like but you must leave a different nutty tax move each time you comment.
- Offensive comments – or comments that otherwise violate my comment policy – will be deleted and will not be considered valid for purposes of the contest. I enjoy a good joke as much as the next person but remember, my mother could be reading (she’s online a lot more these days).
- Pingbacks and other links will be disregarded for purposes of the contest.
- You must include your full name and your email address with your entry. I won’t publish your email address, but I do need contact information for the winning entry. I respect your privacy, and I will not send you anything unrelated to your entry in this contest.
- By entering the contest, you agree that I may post any part or all of your submission including your name as a part of the contest announcements or promotions, with the exception of your email address.
Thanks to Nuts.com for donating the prizes.
Nutty tax moves… Fun right? Go!
The nuttiest – and it is legal, I have come across is fostering a dog for a rescue – you can write off their food, crate, anything you purchase they need, a portion of you electric, heat, water bills and even a portion of you mortgage if you donate a room for their care. I foster for a puppy mill rescue for toy dogs. This is a very rewarding activity and a great tax savings! (Some rescues supply food, medical and other items for the dog)
Trying to get one’s car considered a primary residence, and hence deduct interest on the car loan.
Also – this one works, at least in the UK – self-incorporating and framing all salary as dividends of that self-corporation, cutting tax rate in half.
A friend told me that her cousin was going to try and use his dog as a dependant. I don’t know if he actually filed his taxes like that or was just joking.
Had a former client that owned/published a magazine about churches and religious events/activities in our midwestern city. He took his family on a skiing vaction to Colorado. Upon returning he decided to have his wife write travel article in the mag about their trip so they could write the trip it off.
Best ever: My client who asked if he could deduct his nitrous tanks (for which he kept receipts!) as a business expense since getting high is an important lifestyle componant of being a musician. I said no.
P.S., If I win, I nominate the recipient of my prize be Ms. Diane O’Brien, a fellow totally overworked tax accountant currently residing 16 hours a day in her office in MA.
The recent story of the lady news reporter hits close to home. I once worked on a client’s return where both the taxpayer & spouse were news reporters. I tried to tell the Partner that I didn’t think they could deduct their suits and so on as tax deductions, but the client said claim them anyways. I don’t work there anymore, so who knows if they will get audited!
I think the nuttiest tax move I heard of was people divorcing for the sake of lowering their tax burden.
One of the first questions we ask is if you are married. We can get the most baffled looks from clients. Then we explain what the rules are and the client will still sit there and ponder. Finally they will give you an answer, then 2 days later come back and say no that wasn’t right and want to change to something else.
The weirdest move I saw was a person who gave names to all the pets in the household. Actually received Social Security numbers for them all, as well, and then wrote himself up as Head of Household, using each named pet as dependents. ( I had nothing to do with the filing )
I offered to be liaison when IRS asked for Picture ID’s on audit. Kept them out of jail, arraigned payment plan and then Bowed out of future association.
PS: If Terry is correct…then I need to refile 30 years of tax forms…(giggle)
I was told that was only allowable if one has a 501C status, or the like, otherwise, all costs associated with animal care, unless a Farmer producing product for sale, is out of ones own pocket….AM I WRONG ?
I had a neighbor who declared her dog as a child…..luckily, her husband found out before they filed…..and rectified the situation 🙂 Dumb.
Kelly: I just read your article and one item gave me pause. You said that claiming a parent as a dependent was a risky move. Are there not times when it is true and allowable. As an elder law attorney I have many clients who provide a home and care for their parent and I suggest they consider claiming the parent as a dependent. I’d like to hear more about when you can do this and what the risks are.
But, here’s a neat tax story (nutty or not) my law school was not accredited when I first started attending (it was by the time I graduated) . A classmate of mine claimed a deduction for his tuition. When audited he said since the school could not grant him a degree he wasn’t preparing for another job and only getting knowledge for his current position so it was deductible. He won that argument with the IRS – he’s a great lawyer!
Thanks Edward for your comment. You can certainly claim a parent as a dependent if they qualify – but not simply because they live with you occasionally. I’m writing a piece about the “sandwich” generation – those who take care of parents and children – which will hopefully clear up some of the confusion. I’ll link to it when it’s up.
I heard about someone who claimed their pets as dependents on their tax return – putting their names in as children of thiers.
I had a client who was audited by the irs on their ranch entity. They did not have any employees, so I was suprised when I saw the report from the agent charging us only with payroll taxes. I answered him to let him know that this entity did not have any employees, but he disagreed, as he saw where we paid someone for a “cattle guard”. He was sure it was a ranch hand. We made a trip to the ranch later to show him what a cattle guard actually was. He retracted his report, and we still laugh about that to this day.
A nutty tax move I have heard is getting married before the end of the year (ie. in December) for tax breaks. My brother got married in Dec. a number of years ago and it was rumoured that he was getting married that time of year so he could claim spousal credits for tax purposes!
I read about this nutty tax move. A women hid nearly $170,000 in her underwear in order to avoid paying taxes on the sale of property in Sudan. She was caught at the Kennedy Airport. You can read about it here:
http://politifi.com/news/Woman-caught-with-170000-in-her-underwear-at-JFK-1709996.html
I had someone who wanted to deduct all clothing purchases while they were job hunting. He claimed to be a “nudist in the privacy of my (his) home.” I told him no, because he would were those clothes again whenever he left his house. Then I waited until he left before laughing myself silly.
Sorry, didn’t spell/grammer check. WEAR those clothes (not were)
I just got the best question a man just called the tax office to check and see if what he heard was right. He had a part time job and earned $1,192 and wanted top know, because he had heard that if he made under a certain amoint he didn’t have to” claim it”. I ask him if he was a student or was his parents dependant then he did not have to file a return. The he said he made a lot more money at his full time job. So I informed him he needed to report ALL his worldwide income and that his part time income needed to be added to his other income.
Please folks let me see your return you have done your self soI can fix them.
I once had a client who I did a Sch C for. She ended up owing due to SE tax. She left but called back the next day. She wanted to know what her tax would be if we took off one of her 1099s. I ran a “What-If” scenario and told her that her tax would have been less if she had made less. She told me to file her taxes without the 2nd 1099. I refused. She picked up her stuff a week later. I assume she’ll file somewhere else and get audited.
I had a mom with two young children( dependents) who showed me her W-2, from the first sight, I knew she qualifies for the highest amount of Earned Income Credit. I explained her that she got the max aid from government. She answered: Yes, I know and specifically plan for it. I just worked for the right amount and then I quite working…..