Identifying and substantiating deductions is complex for those not familiar with the rules and regulations. With changing tax laws at the state and federal levels, not to mention the differences between state and federal tax regulations, it is difficult for individuals and small-business owners to stay up to date. That's why knowing where to turn is of the utmost importance.
"The complexity of tax laws underscores the importance of working with a certified public accountant," Piché said. "These professionals are highly educated, keep up to date on changing laws and serve as valuable advisers for tax planning, preparation and beyond."
CPAs are experts in tax law and the tax code, and can catch changes that may apply to your return, helping you avoid costly errors.
Here is the MNCPA's list of the strangest — and unacceptable* — deductions for this:
- Pop-up deduction: One CPA had a client who wanted to deduct a pop-up camper as a business expense because the owner wanted to claim it as a construction trailer. The CPA deflated the idea.
- Hunting property: A client in the sporting goods industry wanted to deduct their hunting property. Claiming that could put a target on your return from the IRS.
- Riding lawn mower: A real estate agent tried to deduct a riding lawn mower for, apparently, sole use to "trim" the grass around for sale signs on their listed properties. That's a bad pitch.
- Claiming the family pet: No matter how ferocious your pooch may be, it's not deductible as a security expense unless you have a legitimate junkyard dog. That means no food, vet visits or leather paw covers will work as deductions. Also, pets cannot be claimed as dependents.
- Graduation party: Business contacts attending a personal event, like a graduation party or wedding, doesn't make it a business expense. Really, you can't have your cake and eat it, too.
- Winter coat and snow blower: One can easily argue all the merits of moving to and living in Minnesota. Snow might be a harder argument, but even so, the cost of a winter coat and snow blower do not count as moving expenses, as one California transplant attempted.
- Grandchild's private school tuition: As nice as it sounds, paying for a grandchild's tuition is not a charitable donation. Better study up for next year.
- Sturgis, baby: A motorcycle enthusiast went to the world-famous Sturgis Motorcycle Rally and wore a company T-shirt with a logo on it under his leathers. Unfortunately, it doesn't qualify as an advertising expense. Better ride off into the sunset with that scheme.
- Chainsaw donation: One client donated a chainsaw to a children's hospital. No, it didn't make the cut for charitable donations.
- Cosmetic enhancements: From augmentations, hair salons, tanning booths and manicures, these expenses generally are not deductible, as many clients have tried to claim.
* Taxes are complicated. Each situation is unique and depends on the facts and circumstances involved. Consult a CPA for information on what may be allowable for your specific situation.
Questions about what you can and can't deduct on your taxes? Contact a CPA. Don't have one? Visit www.CPAmeASAP.com, or call 800.331.4288.
The Minnesota Society of Certified Public Accountants (MNCPA) serves the public interest by advancing the highest standards of ethics and practices within the CPA profession. The MNCPA delivers on that promise by offering extensive continuing professional education and resources; advocating for members and the public with regulatory agencies and boards; and mentoring and encouraging the CPAs and business leaders of tomorrow. Founded in 1904, the MNCPA has 9,000 members who work in public accounting, business and industry, government and education.
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SOURCE Minnesota Society of Certified Public Accountants