Deduct! Deduct!
That's the tax battle cry each year for many taxpayers, whether they itemize on Schedule A or rely solely on the above-the-line deductions found mostly on the long Form 1040.
Both methods offer lots of opportunities to get your earnings down to the lowest possible taxable amount.
Click image for Shannon Ryan's full crazy tax deductions infographic at The Heavy Purse.
But many tax deductions also have limits that reduce their effectiveness. So some folks try to push those boundaries, sometimes too far.
Don't try these tax claims: We've all heard about pets being claimed as dependents. Yes, there are some legitimate pet-related tax breaks, but they are not, in the Internal Revenue Service's eyes, your fur babies.
If you must wear a special uniform to work, that outfit might qualify as a deduction. But just keeping up your professional appearance at work is totally on your dime. When your wardrobe is suitable for wear beyond work hours, the apparel is not an allowable deduction, even if you're in the public eye.
And simply inviting your boss and coworkers to your daughter's wedding does not allow you to write off the expensive nuptials as a business networking expense.
For the last several years, Jay MacDonald has tracked for Bankrate some of the most outrageous attempted tax write-offs. His 2016 list of some of the craziest tax deduction tries, which is today's Daily Tax Tip, include would-be tax tales ranging from a shaving razor to children's earnings to a lingerie model's kitchen renovation.
While entertaining, Jay cautions "do not try to slide zingers like these past the Internal Revenue Service. Serious consequences may result if you fail to file, falsely file or otherwise concoct your own alternate reality on your annual return."
March 2016 tax moves: So what are law-abiding taxpayers to do when it comes to reducing their annual tax bills? I'm glad you asked.
You can contribute to an IRA, either Roth or traditional. You have until the April filing deadline, which is on the 18th this year, to put in money for the 2015 tax year. Doing so could double your tax break if you also qualify for the retirement savers' credit.
Check out your 2015 purchases. The state and local sales tax itemized deduction is now a permanent part of the tax code. If you opt to claim this amount instead of state and local income taxes on your Schedule A, be sure to add the sales tax you paid for a big-ticket item like a car to the IRS' standard sales tax table amount for your state.
And don't forget to count as an itemized deduction everything you gave to charity last year, including household goods and still in good shape clothing. That's one way those otherwise nondeductible personal outfits can pay off on your tax return.
You can find more tax-saving tasks in the March Tax Moves over in the ol' blog's right column. Just scroll down a bit and look for the red lettering under the countdown clock that's keeping track of how long until we reach the April filing deadline.
