Love is much nicer to be in than an automobile accident, a tight girdle, a higher tax bracket or a holding pattern over Philadelphia.”
– Judith Viorst, children’s author and believe it or not, tax activist
I love Valentine’s Day. I’m a sucker for flowers and candy and goofy cards – anything for an excuse to be sweet and mushy (yes, tax geeks have feelings, too). And I realize that not everyone is as crazy about it as me – and that you might be stuck for a last-minute Valentine’s Day gift. So, I’m here to help you out. Consider these eleven tax-favorable Valentine’s Day gifts, revised for 2013:
- Buy a vacation house. You already know that you can deduct costs associated with buying your main home, right? Mortgage interest and real estate taxes are deductible on a Schedule A if you itemize. But you can also claim (subject to certain limitations) expenses associated with a second home. And it doesn’t have to be the Biltmore House. A second home includes not only a house but a condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Yes, that also means a yurt (just in case anyone is reading and wondering what to get me *ahem*). And a lake house. And a beach house. You get the picture.
- A wedding ring. People love to propose on Valentine’s Day – ostensibly because it’s the most romantic day of the year. While the actual cost of the ring isn’t deductible (warning: do not construe this as an excuse to skimp on the ring), the tax break is the ever after. Your filing status is determined as of the last day of the year, so even if you don’t get married until December 31 this year, you can still file as married filing jointly. And even though we hear a lot about the “marriage penalty,” the truth is that most married couples pay less in taxes as a married couple than they would have paid had they stayed single. For most couples, “I do” can result in a lower tax bill.
- Get some tax relief so you can get married. Have a tax debt? Is it interfering with your future plans? I wouldn’t be surprised. One of the most common reasons for sorting out tax debt is “encouragement” from a significant other. Let’s face it: nobody wants to marry into a tax mess. It can cause all kinds of problems moving forward. Make your loved one happy and make arrangements to clean up your tax debts now. A fresh start is an amazing gift.
- Get a physical. We all grow up believing in happily ever after. We don’t tend to think about unexpected illnesses and hospital beds. If you want to spend forever with your significant other, you need to take care of yourself. And that means regular check-ups and testing. Depending on your sex and age, that might also mean screenings for breast cancer, colon cancer, and heart disease. And it’s all deductible if you itemize. If you’re planning to give someone your heart, make sure it’s healthy. You’re paying for it anyway, right?
- Go to school – or send your sweetie to school. For 2013, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for your own education or for your spouse (or other dependents). You don’t necessarily have to get a degree: the lifetime learning credit is available for tuition and related expenses at an eligible educational institution. An eligible educational institution includes any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education (ask the admissions office if you’re not sure). So stop talking about culinary school or music school and do it. Life’s too short for the coulda, shoulda stuff. Find your passion. And what better day to do that than on Valentine’s Day?
- Make a gift in your sweetheart’s honor. What do you get the person who has everything? What about something for those that have nothing? One way to show how much you care about your sweetheart is to make a donation to a cause in his or her name. Is he or she a nature lover? Dedicated to saving the whales? Passionate about cancer research? Show you care about your loved one by supporting causes close to him or her (you can find my list for 2012 here). If you itemize, you can take a deduction for your gift. And if you’re over 70 1/2 and taking withdrawals from your IRA, you can contribute up to $100,000 tax-free from your IRA directly to charity (this perk was extended under the new budget deal). It’s a win-win. Actually, it’s a win-win-win. The charity wins, your sweetheart wins and you win. Plus, it’s a really wonderful thing to do.
- Stop smoking. I’ll be blunt: smoking stinks. Literally. It’s disgusting. It’s expensive. And it will kill you. So quit now. Not only will you save a lot of money out of pocket (a pack a day habit will cost, on average, nearly $2,000 per year for a smoker), the cost of participation in a smoking-cessation program and for drugs to alleviate nicotine withdrawal that require a prescription is deductible as a medical expense if you itemize. So stop smoking now. Your future self – and your significant other – will thank you for it.
- Create or contribute to a spousal IRA. What says “I care about you” more than providing for your spouse in the future? If you’re married to someone and you make more money than he or she does, you can contribute to an IRA on their behalf. So long as you file a joint tax return, you can take make a contribution to a traditional IRA for your spouse of up to $5,500 ($6,500 if your spouse is age 50 or older) in 2013. Phaseouts and limitations apply (of course they do).
- Have a baby. Okay, so the time frame on this one can take a bit longer than 24 hours but there’s nothing that says you can’t get started on Valentine’s Day. I’m not gonna lie to you: having a kid is a lot of work. And it’s crazy expensive and time-consuming (take this from a woman who just baked, frosted and decorated four dozen cupcakes for school Valentine’s Day parties last night in between taping Hershey’s chocolate hearts onto paper Valentine’s cards). But there are significant tax breaks associated with having children including increased exemptions and the earned income tax credit. Again, the breaks don’t actually offset the real costs of having kids but if this is a step you were considering taking anyway… it could be a nice way of moving your relationship forward. And it’s a whole lot more fun than giving someone a sweater. But be forewarned: unlike for a sweater, the return policy for babies suck.
- Hire a tax professional. Yes, it’s self-serving. But consider this: statistically, most fights between couples are about money. Anything that you can do to make that less likely is a real plus, right? In addition, the IRS estimates that the average federal form 1040 will require 16 hours to complete from record-keeping to submission. Think about what you could do with those extra hours… watch a movie, go out to dinner, go for a walk. And the tax bonus? Paying for a tax professional is deductible if you itemize. So pick up the phone and make an appointment with someone to help you out with your taxes this year.
- Fill-in-the-blank with the expensive gift of your choice. If you file a federal form 1040 and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. You can’t claim both. If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount. So if you’re thinking about buying a big-ticket item, take heart: the sales taxes are deductible.
So there you go: eleven tax-favored gifts on Valentine’s Day. Now, you have zero excuses. And you’re welcome.
Note: The TCJA made changes to many tax deductions and credits which were previously available. Most of these changes are applicable for the years 2018-2025.
