Weird tax deductions: Understanding the entire tax code is like trying to understand a religious text. At 10.1 million words and counting, the tax code has experts and laymen alike scratching their heads.
But that doesn’t mean you should just give up and give the government all your money. While taxes might seem like a stick-up, it’s really a carrot and stick system. And the point of the game is to get maximum carrot without getting hit by the stick too hard.
There are three ways to approach this system:
- Don’t pay and hope you don’t get caught.
- Hire an expensive lawyer who thinks he can find “all the loopholes,” and still hope you don’t get caught.
- Plan for your taxes appropriately.
We recommend the third option. You’re more likely to stay out of jail. And if you’re tempted by the other two options, remember, plenty of people have gone up against the IRS and lost.
Here are some weird and not so weird tax relief options to assuage your end of the year woes.
1. A Health Savings Account For Tax Relief
If you’ve got a massive deductible on your health insurance plan, you’ve probably got your emergency credit cards ready. But there’s another way to prepare for what health insurance won’t pay for. An HSA or Health Savings Account.
A health savings account is tax-free and distributions are tax-free if you use the money for approved. Not even the interest gets taxed!
And if nothing happens while you’re putting money away, you’ll have a “tragic-day fund.” Then you won’t find yourself cutting up maxed out credit cards and declaring bankruptcy one day.
2. Bring Toto To Kansas With You
Moving expenses are already tax-deductible if your move is due to a change in employment. But did you know that the expenses of moving your pets can go under that umbrella too?
It can cost $125 or more to fly your pet across the country. Think of how much it might cost to fly a whole menagerie. You could at least keep that part of your income out of your final tax evaluation.
3. Start a Whaling Business
You can blame the government when the aliens come looking for their humpback friends and don’t find them. Whaling captains are eligible for a $10,000 deduction for ship repairs and equipment purchase.
But there is hope for the whales and the world. As it turns out, whaling is illegal in the United States. Only Native Americans are exempt from the law. So, you’ll need to prove your ethnicity before taking out a loan and adopting the name Ahab.
4. Start a Retirement Account
Most Americans who retire this year won’t survive on what they’ve got. They only have %12 of the recommended one million dollars.
But if you’re young, you can start saving right away. And your savings are tax deductible!
Unless you’re putting into a Roth IRA, most contributions will be tax deductible for the time being. It’s called deferred taxation and you won’t get taxed until you take it out at retirement.
5. Build a Swimming Pool
Ok, we’ll admit that this was a trick. You can’t *just* build a swimming pool and deduct the expense on your taxes. You need a real medical condition that necessitates one.
Physical therapy costs are tax deductible and if your doctor recommends a swimming pool, you can deduct your “money pit” from your taxes.
Be warned, however, your doctor might actually expect you to swim for exercise. So, if you wanted a pool to just lounge in, you might be out of luck.
Be sure to consult your CPA to be sure tax laws haven’t changed in this regard.
6. Take the Home Office Deduction
If you work from home or have a side business, you can actually deduct some of your bills from your taxes. It’s only a percentage of your house expenditure, but at least it’s something.
How do you take advantage? Simply measure the square footage of your space (you need an exclusive space, your kitchen table doesn’t count).
Then divide this square footage by the square footage of your house. That’s the percent of your house bills (including rent or mortgage) you can deduct from your taxes.
Related: $20 Off TurboTax Self-Employed here!
7. Quit Smoking
This one is legit for any smoker who is willing to see a doctor. If you have a prescription from a doctor for smoking-cessation programs or drugs, you can deduct those costs from your taxes.
This is under the Medical and Dental Expenses section of the IRS code. You can deduct for a whole host of medical and dental expenses including dental costs, weight loss programs for specific diseases, and medical transportation costs.
That last one is really important for anyone living in a small town. If something major happens, you’re quite likely to need a life flight to a bigger hospital. Bonus tip: get medical flight insurance if you live in a small town.
8. Find All the Tax Credits!
If you want to continue your education you can. And the government gives you a tax credit for it even if you aren’t fresh out of high school.
You can claim up to $2,000 of post-high school education expenses on your taxes. This is called the Lifetime Learning Credit.
Look out for the American Opportunity Tax Credit as well. If you’re going to college, you can claim $2,000 of qualifying college expenses and 25% of anything over that up to $2500. If you don’t make much, this could bring your taxes down to zero.
9. Go to Criminal Court (Legal Expenses!)
If your name is Heisenberg and you’ve been laundering money through a car wash, don’t get caught. But if you do, you can still stick it to Uncle Sam for your Saul Goodman expenses.
Wait, what? That’s right, accused criminals can deduct their legal defense expenses from their taxes. So, if you gotta call Saul, keep track of what he charges you. You could save some money while you sit in prison.
Knowledge is power. If you’ve chosen option #3, you’ve chosen wisely. We’ve given you a little bit of knowledge on tax relief, now it’s your job to be wise and use it.
Just know that in these changing times, you should always consult a tax professional to what might be a legitimate tax deduction.