It may be December, but in reality, tax time is right around the corner. Whether you like to do your taxes as soon as you receive your documents or procrastinate until the last minute, it may be good to know when you may be missing out on certain tax breaks. As you fight to organize your 2017 taxes, here are a few tax breaks you may be shocked to discover.
Expressing your musical talent
An accomplished music professor traveled to jazz rehearsals and performances to play with other accomplished artists. He used this tactic to sharpen his skills and broaden his practice. When he went to write off his travel expenses he was shocked to discover he was denied because the IRS considers this a hobby of his, not an expense.
Later, the tax court sided with him because he could translate his experience into teaching for his student. So, if you can expand your talent and apply it to your job, you might be in for a tax break.
Putting in a swimming pool
A young man was diagnosed with emphysema. The doctor told him that if he swam daily he could improve his breathing capacity. Since his other family members rarely used the pool, the tax court allowed him to write off the expense as a medical expense. This included the extra costs to upkeep the pool.
A self-employed woman who worked remotely at her condo decided to sue her neighbors and condo association for disruption to her workday from loud dogs and construction. She later deducted $26,000 for legal fees on her business expenses. The IRS denied this, but the tax court approved half of the amount to be deducted because the IRS could not prove that this distraction didn’t directly affect her work.
Fees for babysitting
Need a babysitter to go do charity work? You may be able to write off babysitting fees if you hire a babysitter to volunteer at your favorite nonprofit. The tax court says this is a charitable deduction even though it is not a direct contribution to the charity.
If you’re a sole proprietor and regularly meet with your clients at your home, you could be able to deduct your landscaping expenses. According to the tax court, if you use your home as a place of business the upkeep of the grounds could be deducted from your taxes. This could also include (and not be limited to) mowing the lawn and repairs to your driveway.
Boosting your child’s career
A young man’s father owned a real estate company. He was a local motocross celebrity so his father decided to sponsor him. He eventually became pro due to his contributions. The father paid about $160,000 to support his career. Since this investment sparked new business connections for the father, the tax court allowed him to write off $160,000 of business expenses for the sponsorship.
Owning an airplane
Ever wanted to own an airplane? A couple who owned real estate decided to purchase a plane to check on their properties instead of hopping in the car. The tax court allowed them to deduct all expenses associated with the plane including fuel.
The Simply Money Point
Most likely, these situations will not apply to you. But it’s amazing how creative some people can get! And, with tax reform officially happening, many of these deductions might not be available in 2018 and on.
With that said, it’s important to work with a tax professional and a trusted financial planner (we recommend a Certified Financial Planner™) to develop a tax strategy that’s suitable for your personalized financial plan. You never know when you can get a tax break.