TurboTax / Tax Calculators & Tips / All Tax Guides / General Tax Tips / 8 of the Craziest Illegal Tax Deductions Ever Claimed

8 of the Craziest Illegal Tax Deductions Ever Claimed

Updated for Tax Year 2014


OVERVIEW

These 8 tax deductions were actually claimed, and -- unfortunately for the individuals involved -- turned out to be highly illegal.


Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99$34.99*
Start for Free

Death and taxes might be the only two certainties in life, but if you were the IRS, you would probably argue in favor of adding a third certainty: some people will try to cheat on their taxes. For the truly bold, there’s seemingly no end to the type of expenses a person might try to write off.

1. Hiring an arsonist to burn down your business isn't tax deductible

Arsonist-1-1Rather than continue struggling with a floundering business, one man opted to take the easy way out and hire an arsonist to burn the building to the ground. In addition to planning on collecting a cool half a million in insurance money, the man also attempted to deduct the $10,000 fee paid to the arsonist. Not only is there the immediate issue of linking himself directly to a criminal act, there’s also the added headache of not have the arsonist’s 1099 on file …

2. A "bubble of pure air" is really more of a luxury item than a necessity

air-2-2Northern New Jersey isn't exactly known for being pollution free. So, when a resident who was fed up with the poor air quality decided to do something about it by enclosing himself and his family in "a bubble of pure air," it wasn’t the craziest idea ever. However, attempting to deduct what was listed simply as a "pure bubble" on his tax returns might not have been the smartest thing to do. The resulting audit would have been worse if the situation wasn’t so ludicrous that it left the IRS agent laughing hard enough to waive all penalties and simply deny the deduction.

3. Your marijuana crop might be a business expense, but it's not legitimate

Marijuana-3-1If you're running a criminal enterprise, normal tax laws should be the least of your worries. Still, you have to admire a drug dealer who cares enough about obeying the law to sit down with a CPA and make sure everything is being done on the up and up. For one entrepreneur who listed his crop of marijuana as a deductible business expense, his good intentions quickly turned into a rude awakening. Apparently the U.S. government doesn’t want your tax dollars when they can just arrest you and seize your property instead.

4. Your daughter's wedding is not a business entertainment expense

wedding-4-1Weddings are a 60-billion-dollar industry, and they didn’t get that way by being cheap. It stands to reason that if you’re going to foot the bill for your daughter’s big day, you’d want any type of break you could get. Unfortunately, inviting a few clients and attempting to write off the entire thing as a business entertainment expense doesn’t seem to fly with the IRS, probably because they knew the clients were really attending the wedding just to be polite.

5. Your dog is not a dependent

dog-5-1This one isn’t an isolated incident, and on more than one occasion people have attempted to count their dogs (or cats) as dependents. Even though it seems unfair to some, opting to let a pet live under your roof doesn’t entitle you to any additional tax credits. Bad news for pet owners looking to recoup some of that money they keep shelling out on obedience training, chew toys, and adorable sweater vests.

6. Getting a new tattoo is not a medical expense

tattoo-6-1Just because something goes on your body doesn’t mean it’s a legitimate medical expense. This holds particularly true for elective medical procedures and body decorations like piercings and tattoos. Unfortunately for them, the IRS has a minimal tolerance for people who attempt to deduct their completely optional form of self expression.

7. A fallout shelter is not "preventative medicine"

fallout-7-1Your own personal beliefs don’t usually fall into the category of things the IRS cares about. But, that can change on a dime as soon as you attempt to deduct your personal fallout shelter as “preventative medicine.” From their perspective, the fallout shelter is about as medicinal as a bulletproof vest or a roll-bar for your convertible.

8. Your deadbeat son isn't tax deductible

deadbeat-8-1Just like the multiple people attempting to claim pets as a dependent, bad debt from deadbeat offspring is a sadly common occurrence. While it’s one thing to claim a loss on money that can actually be tracked, trying to deduct the $2,000 you loaned to your unreliable son to help get his real estate business off the ground isn’t going to fly. Unless you have paperwork to back up the loan and have already attempted to get the money back through the proper legal channels, the IRS doesn’t sympathize with your poor decisions or those of your children.

Sources

20 amazing, outrageous and just plain weird tax deductions

Tax deductions that shout "Audit me!"

Wackiest Tax Write-offs

The Most Unusual Tax Deductions Ever!

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

* Important Offer Details and Disclosures
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Actual prices are determined at the time of print or efile and are subject to change without notice. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal efile of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Prices subject to change without notice.
  • TurboTax Mobile: Actual prices are determined at the time of print or efile and are subject to change without notice. Come back here before you file to confirm that the price has not changed, especially if it's been a while since you downloaded this app.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app features and content. TurboTax mobile app devices supported include Android 4.1 and above, iOS 8 on iPhone 4s and above, and iPad 2.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $34.99 Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • About our TurboTax Product Experts: Customer service and product support (phone or chat) vary by time of year. Phone support not included with Free Edition.
  • About our credentialed tax experts: Live tax advice service is available for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Click here for full terms and conditions. Not available for TurboTax Business customers.
  • Get up to 10% on top of your federal refund: Amazon.com Gift Card offer is for federal refunds only. Limits apply ($2000 per e-card, maximum $10,000 per customer). Offer available only for TurboTax Online (except Federal Free Edition) or CD/download versions sold and shipped, or downloaded directly from Intuit or Amazon. Except as required by law, Amazon.com Gift Cards cannot be canceled, transferred for value or redeemed for cash.

    Amazon.com is not a sponsor of this promotion. Except as required by law, Amazon.com Gift Cards ('GCs') cannot be transferred for value or redeemed for cash. GCs may be used only for purchases of eligible goods at Amazon.com or certain of its affiliated websites. For complete terms and conditions, see www.amazon.com/gc-legal. GCs are issued by ACI Gift Cards, Inc., a Washington corporation. All Amazon ®, ™ & © are IP of Amazon.com or its affiliates. No expiration date or service fees.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2013 TurboTax products.
  • 4.8 out of 5 stars: Average based on customer ratings on TurboTax.com for TurboTax Online and CD/download products tax year 2014, as of January 2015.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • TurboTax CD/Download priority phone support: Priority phone support for TurboTax CD/Download Premier and Home & Business is accessible exclusively via the TurboTax.com Help Center.
  • Benefit Assist: After you file, TurboTax automatically shows you a full list of government benefits you may qualify for, like Food Stamps or reduced phone & utilities. Plus, we help you apply, saving you time and making it easier than ever to get more money! Estimate based on calculation of Benefit Assist users from tax year 2013 and published reports of average benefit and savings amounts from federal and state programs. Actual amounts and qualifications based on your individual situation; some individuals will not qualify. Feature may not be available for all customers.
  • Simplified State Experience: New, simplified state tax preparation available for most filers.
  • Eligibility for $25 cash back for returning Deluxe customers: Customers who have completed their 2013 taxes in TurboTax Deluxe (CD or download), and have completed their 2014 taxes in either TurboTax Premier or TurboTax Home & Business (CD or download), and apply here before 11:59PM PDT April 20, 2015, are eligible for $25 back. 2014 TurboTax Advantage users are ineligible for this offer. Terms and conditions are subject to change without notice.
  • $0 Upgrade Offer: Valid for customers who filed their 2013 taxes with TurboTax Deluxe (CD or download), completed prior year data transfer this year, and encounter an upgrade to either 2014 TurboTax Premier or 2014 TurboTax Home & Business (CD or download). Valid February 6, 2015 through April 20, 2015. TurboTax Advantage users are ineligible for this offer. This offer may not be combined with our $25 cash back offer. Terms and conditions are subject to change without notice.