Hermit crab food
A teenager started making food for her beloved pet hermit crab by crunching up cereal and other ingredients in her kitchen. The crab loved it, so she brought small bags full of her new invention to her local pet store, which allowed her to sell it there.
It started out as something fun for her to do. But customers actually started buying it, and now her hermit crab food is carried in a number of different pet stores and she’s making a profit.
So when it came time to do her taxes, she was able to deduct all the costs of making and selling the crab food — including the cereal and plastic bags — as business expenses, said her tax preparer Jody Padar, a CPA and partner at accounting software company Xero.
Extra big suit
As a concert organist, you often have to move back and forth between multiple keyboards and lots of pedals. To have a little extra flexibility to move his arms and legs around, one New York organist decided to get one of his suits tailored so that the pant legs and sleeves were about six inches longer.
Because this rendered the outfit unsuitable for everyday wear his tax preparer, enrolled agent Phyllis Jo Kubey, deemed the suit an allowable business deduction.
When your job is to dive into the depths of Lake Michigan to hunt for dead bodies, you need to know what you’re doing. So one firefighter opted to do his training during trips in warmer places like the Florida Keys and wrote off the costs as a business expense on his taxes, said Padar.
The deduction was allowed, since the training enabled him to keep the scuba diving certification required for his job with the fire department’s dive team, she said.
A 85-year-old woman from Massachusetts surprised tax preparer William Philbrick by trying to claim her parents as dependents on her tax return … even though they were long deceased.
“When I questioned the exemptions, she whipped out the instructions and proceeded to go through the tests: no income, related to her, did not file a tax return [and weren't claimed as dependents by anyone else],” said Philbrick, senior vice president at Greenberg, Rosenblatt, Kull & Bitsoli, P.C.
While he thought the woman was pretty clever, Philbrick still turned down the deduction.
One taxpayer decided to write off the entire cost of his $50,000, multi-year globetrotting extravaganza, which included trips to Italy, France and Greece. And it worked, all because he wrote a book about his travels.
His tax preparer Jerry Lewin, managing director of accounting firm CBIZ MHM, said that because the book was actually published — even if it was by an obscure, low-budget publishing house — and because he made a small profit from it — only 20 books were sold — it counted as a business expense.
Getting tips from informants is just part of the job when you’re a cop. And sometimes, wining and dining — or even paying — those informants can be the only way to get the best information.
As a result, one police officer was able to successfully write off all of his “snitch fees” on his taxes, said Padar.
“You have to get them on your good side so that they can give you the best information possible, and if the money you spend isn’t reimbursable [by the police department], it becomes deductible as a business expense — because it just so happens your business is to catch criminals,” said Padar.
An 80th birthday party
You know you’re getting desperate when you try to claim your grandmother’s 80th birthday party as a business expense.
One woman tried to write off the $2,500 she spent throwing the party, saying that because she handed out samples from her coffee company, the party should be considered a business meeting and allowable as a business deduction.
Her tax preparer and managing partner of Millenial Tax, Meisa Bonelli, didn’t buy it.
When the owners of two competing businesses got married, they decided it was also a perfect time to merge their two businesses into one. So along with the expense involved with the merger, they tried to deduct the entire cost of their wedding as a business expense as well.
Tax preparer Lewin didn’t let this through, however. He said that while the wedding did in fact prompt the merger, it occurred before the businesses merged and was therefore not part of the actual process.
Viagra for a woman
Apparently Viagra isn’t only for men, one IRS auditor discovered.
A woman was being audited over the tens of thousands of dollars she claimed in medical costs for her fertility treatments. As the auditor was looking through all of her documentation and records, he spotted a prescription for Viagra and was convinced it was for the woman’s husband — something she wouldn’t have been allowed to deduct it.
The auditor and Kubey, the tax preparer, argued about the intended use of the Viagra for a while, until Kubey put the ball in his court.
“I picked up the phone and said, ‘Do you want to call this woman, who has spent thousands of dollars trying to conceive a child, and ask her about this prescription for Viagra?”
It’s hard for a lot of people to imagine life without their iPhone these days. But one woman needed her phone so badly she actually had a doctors’ prescription for it.
After getting into a terrible car accident and suffering major brain injuries, the phone now operates as her assistant — reminding her of things she needs to do and answering her questions via Siri.
“It really allowed her to be independent, whereas without that she would need a personal attendant,” said Kubey. “Her doctor said she absolutely could not function without it.”
And so far, the IRS hasn’t contested the deduction, which she included among her medical expenses.
Airfare … for a pet
Just because you bring your pooch along on a work trip doesn’t mean you get to deduct their airfare as a business expense.
That’s what one woman attempted to do, saying she doesn’t like to travel without her beloved dog, said New Jersey CPA Gail Rosen. The client also tried to deduct the cost of a pet sitter for when she couldn’t take her dog with her.
To the woman’s dismay, Rosen disallowed all of the deductions before they could get to the IRS.
A court stenographer argued that because she had to wear pantyhose with her skirts and dresses to work every day, she should be able to deduct them.
She believed that the since she would never wear pantyhose outside of work they should be deducted as a business expense.
But because the hosiery is still deemed suitable for other uses besides stenography, her tax preparer Bob Fodera, a partner at ParenteBeard, didn’t allow her to claim the cost of her tights on her taxes.
It may help your looks, but a wig or toupee is not going to make it past the IRS.
One salesman said he wanted to write off his toupee as a business expense because it gave him more confidence and allowed him to do a better job at work.
But his tax preparer, enrolled agent Stephen DeFilippis, wasn’t convinced, saying it was too much of a stretch for the IRS.