14 Unusual Tax Deductions That the IRS Allows
You’d be surprised to learn what unexpected tax deductions could be legitimate.
If you’re itemizing for tax year 2021, you’re probably trying to claim as many acceptable deductions as you can. Why would you not? Some of them are pretty conventional. Mortgage interest. Medical expenses. Home office. Charitable contributions.
It may be, though, that you’re eligible to take additional deductions for expenses you’d never considered. We don’t know your personal situation and your finances well enough to tell you for sure what you might be able to deduct. Only the IRS can determine that. And if you pay for something that would also get some personal use, you’ll only be able to deduct a percentage of the total.
Many of these deductions have been successfully claimed–some, after being challenged by the IRS and then settled in the taxpayers’ favor in Tax Court.
Home swimming pools. Do you have a medical condition that would be helped by swimming regularly? Would a doctor prescribe that as a treatment? The IRS might want to know whether you could easily get to a gym or a community pool, but you could still make your case that a pool would be a qualified medical expense.
Weight loss help. Has your doctor prescribed weight loss aids to help treat an illness? Some of these treatments might be partially covered by insurance, but you may be able to deduct the remainder as a medical expense.
If a doctor has prescribed regular swimming or weight loss aids for medical conditions, you may be able to deduct at least some of their costs.
Pets. We all joke about deducting our dogs and cats as dependents. But there are times when having a pet could lead to a tax deduction. If you have a service animal or guide dog, you should be able to deduct the costs associated with buying, maintaining, and training it. This, too, would be considered a medical expense.
Musical instruments. Parents were able to deduct the cost of a clarinet and clarinet lessons to help with their child’s overbite.
Animals, again. There’s a famous case where a junkyard owner was able to deduct the cost of the cat food he put out to attract feral cats. The felines took care of pest control for his business. You may also be able to deduct some pet care costs if your dog or cat becomes an internet sensation and you’ve set up a business for it.
Travel and meals. Millions of people have taken on side gigs because of the pandemic economy of the last two years. Some have parlayed this work into full-time businesses. And some of their unusual expenses are legitimate business deductions. For example, there’s the case of the travel writer who was able to deduct 30 percent of her honeymoon costs because she blended it with her work. Or the video blogger who claimed the costs of an RV. This kind of deduction only works if you can show the IRS proof that you produced paying work from your travels.
You may never have considered some of the expenses your small business can deduct. But the IRS makes a sharp distinction between a business and a hobby.
Rideshare drivers. You’re using your personal vehicle for a legitimate business, so you can deduct many expenses, including mileage, actual car expenses, fees and commissions, cell phone charges, and vehicle accessories – but you’ll have to determine what percentage of these are used for your rideshare driving.
Cosmetic aids. Two more famous cases involve the bodybuilder who claimed a deduction for body oil and the exotic dancer who did the same for cosmetic surgery.
Miscellaneous, Obscure—But Legitimate—Deductions
You’re not likely to be claiming any of these, but they just go to show that the IRS tax code contains myriad unusual deductions:
- Have a friend who made less than $4,300 in taxable income who crashed on your couch for a full year? You may be entitled to up to $500 in dependent credit.
- Did you loan someone money that never got paid back? If you can prove you tried to collect, you can write off up to $3,000 per return.
- If you live in Hawaii and have what’s considered an “exceptional tree,” you can claim up to $3,000 per tree, once in a three-year period.
- Some cities in the Northeast are giving homeowners tax breaks for maintaining homes in historical areas.
- Starving artists can get an above-the-line income adjustment if they have W-2 income and their art is a side gig.
- Whaling ship captains can claim up to $10,000 for ship repairs.
Digging for Deductions
We’re not suggesting you try deducting some wacky expenses on your 1040 this year. But we are suggesting that you let us help you find every deduction and credit that’s allowable. It’s a busy time of year, of course, but contact us if you need tax prep help, and we’ll see how we can assist.