Tax cheats get creative

APR 05, 2009
As the Obama administration scrambles to tighten tax loopholes, the strategies for dodging income taxes continue to evolve. A recent report from Bankrate Inc. in North Palm Beach, Fla., uncovered such creative deductions as toilet paper from a home office worker, dog food as a home-security expense and a $2,000 gynecologist bill as "repairs and maintenance." Those were among Bankrate's fourth annual wackiest tax deductions. Previous installments of creative accounting included tax write-offs for a wedding as a business expense, dog day care and sperm donations. According to the most recent findings, compiled by Bankrate contributing editor Jay MacDonald, the definition of a tax deduction is limited only by the imagination of the tax filer. A Cleveland accountant had to challenge a client who wanted to deduct as a medical expense the cost of a $100,000 swimming pool. In Fort Worth, Texas, another creative tax filer finished off a home landscaping project by cutting down trees and donating them to charity. In Kissimmee, Fla., a woman decided to claim as a dependent a young man living in her home as a tenant by listing him as her nephew. "As audacious as these stories might be, rest assured that the Internal Revenue Service is not amused when taxpayers fail to file, misfile or underreport income or otherwise attempt to avoid taxes," Mr. MacDonald wrote in the report. In the case of the landlady who claimed that her tenant was her nephew, the IRS charged the extended family $5,000 in back taxes and a $2,000 penalty. The entire report can be found at Bankrate.com.

Latest News

eMoney supports focused financial planning with enhanced needs analysis
eMoney supports focused financial planning with enhanced needs analysis

The Fidelity-owned fintech aims to help advisors connect with mass market and mass affluent prospects with single-goal conversations.

Trump SEC pick Paul Atkins grilled by Democrats in early political test
Trump SEC pick Paul Atkins grilled by Democrats in early political test

The prospective chair of the agency has pledged to shed conflicted interests and "return common sense to the SEC."

Finra moves to boot Alpine Securities, same firm that claims the regulator can’t
Finra moves to boot Alpine Securities, same firm that claims the regulator can’t

'If I were on the side of Alpine Securities, I’d put all my eggs in the federal court,' one attorney said.

CFP Board floats new procedural rules around bankruptcy, misdemeanors
CFP Board floats new procedural rules around bankruptcy, misdemeanors

If approved, the proposed revisions would achieve outcomes similar to the existing process while reducing the burden of oversight.

What pre-retirees don't know about Social Security could be hurting them, says T. Rowe Price
What pre-retirees don't know about Social Security could be hurting them, says T. Rowe Price

Survey research reveals gaps in retirement savers' knowledge, pessimism around receiving benefits, and a lack of good options to solve looming solvency crisis.

SPONSORED Retirement plan balances are flourishing. Why are so many advisors missing out on a $3 trillion opportunity?

Participants who receive professional 401(k) advice see higher returns on average, net, than those who don't.

SPONSORED Focus on clients, not compliance – why Gary Corderman found his fit with Farther

This wealth management platform finally delivers on the technology promises other firms couldn't - giving advisors a better way to scale and serve