If you started working on your tax return, you probably know to write off your mortgage interest and the check you wrote to the food bank. But what about your pet food or the swimming pool you bought last year?
The catch is that the tax breaks depend heavily on each person’s unique circumstances. Treating a health condition is far from an exact science. And what could be a leisure purchase for one taxpayer may be a legitimate business expense for another. But that also means that taxpayers claiming a unique expense need to be ready to back up their write-off. Some of the taxpayers who have been successful with claiming more creative tax breaks have had to make their case in tax court.
Still, taxpayers who spent a lot of money and energy researching and treating health issues, or who are writing off business expenses should take the time to make sure they’re writing off everything they can, accountants say. “Sometimes the rules are not black and white,” says Melissa Labant, director of tax advocacy for the American Institute of CPAs. “A particular expenditure may be deductible for one business but not another.”
Here are some expenses you may not realize could lead to a tax break:
Gas money. Taxpayers claiming the medical deduction can write off transportation costs for getting to and from doctor’s visits and other medical appointments. Of course, gas money alone won’t be enough to help them qualify for the tax break. Total medical expenses have to be greater than 10 percent of a person’s adjusted gross income, or greater than 7.5 percent if the person, or his or her spouse, is at least 65 years old. So people who already spent a substantial amount of money on surgery, exams and other treatment should make sure to include the cost of the gas, tolls and parking they needed to get to and from those appointments when filing for the tax break. Gas money or mileage and other travel expenses can also be deducted for business trips and for people who move beyond a certain distance for a new job, but aren’t reimbursed for moving expenses.
Swimming pool. In rare cases, people who need a swimming pool for health reasons, say for physical therapy to help treat a chronic pain condition, may be able to write off the cost of the pool as a medical expense. But the write-off won’t come easy. Taxpayers may also have to show that the pool is not being used for any other purpose, Labant says, a feat that may be difficult when kids or grandkids are also splashing around in the pool. Some people may have to prove that it is too inconvenient for them to access a pool anywhere else, either because of distance or because of the severity of their condition, she adds.
Home improvements. While most people won’t write off swimming pools, other home improvements, including the installation of hand rails, ramps or elevators may also be deductible if they are made for medical reasons. Taxpayers should keep in mind, though, that the deduction would be offset by any value the change adds to a person’s home. So say a homeowner spent $15,000 on an elevator and a property appraiser estimates that it increased the value of the house by $10,000. He or she would be able to write off $5,000 of the expense as a medical deduction. If the improvement doesn’t lead to any increase in property value, the entire expense is deductible.
Conference costs. People who attended a medical conference to learn more about the ways to treat a condition affecting them, a spouse or a child may be able to write off the transportation costs and attendance fees as a medical expense. Most of the time at the conference must be spent attending sessions focused on medical information.
Rent. Don’t celebrate just yet. The rent you pay is only deductible if it’s for a business. If you’re a renter who works from home, you may be able to deduct only part of your rent, according to the IRS. And even then, you need to meet the stringent rules for making business use of a home. That includes a requirement that the relevant section of your home be used only for business. (If your home office also doubles as your guest room, you may need to count it out.)
Landscaping. Small business owners with a home office may be able to write off certain cosmetic improvements such as landscaping, lawn care and driveway repairs. One self-employed man who met most of his clients at home had success writing off part of his landscaping costs in 2001, leading to deduction of more than $11,000, when he showed that the section of his property receiving the improvements was used primarily for business.
Pet food. In another rare case, the owners of a junk yard wrote off $300 in cat food. The taxpayers explained in tax court that they brought wild cats on to the property to help scare off snakes and rats. Therefore, the food needed to feed the cats was found to be a legitimate business expense. Most people will have a hard time meeting such particular circumstances, but the 2001 case could inspire some taxpayers to think creatively about their business expenses.
These tax write-offs may not be a good fit for you, but the examples may be a reminder to make sure to give your tax return a close look. If you aren’t sure if something qualifies, check with the IRS or seek help from a tax pro. “Don’t assume something is nondeductible because you enjoy it,” Labant says.