FICA explained: What to know about Social Security, Medicare tax rates
FICA, the Federal Insurance Contributions Act, is the federal payroll tax. Here’s what taxpayers need to know.
Most Americans know charitable gifts, retirement contributions, student loan and mortgage interest are tax deductible, but what about your pet, swimming pool, private jet or cosmetic surgery?
It depends.
Over the years, the IRS has allowed some unusual tax deductions, but the circumstances were very specific. Basically, taxpayers must prove the items were necessary or a legitimate business expense. They can’t be personal expenses.
Here are examples of extraordinary deductions taxpayers have asked for and received from the IRS. It’s important to note that even though these were approved, accountants recommend you consult with a professional before pursuing any off-beat deductions.
Breast implants
Cosmetic surgery is usually a personal expense and isn’t tax deductible.
However, in 1994, self-employed exotic dancer Cynthia Hess (aka Chesty Love) won her tax case allowing her breast implants in 1988 to be considered a legitimate business expense and could, therefore, be deducted. She argued that they were necessary to earn a living and that she, otherwise, wouldn’t have enlarged her breasts “to such an extent that they made her appear ‘freakish.’”
The court decided the breast implants satisfied a two-part test: (1) required as a condition of employment and (2) unsuitable for everyday use. The breasts were analogous to a “costume,” necessary for her job to make money, and that because of how large they were, they were unsuitable for everyday use but unable to be removed daily.
Private jet
John and Joanna French won their case in 1990 to write off their private jet on their 1984 taxes. They argued that they used their private plane to fly to manage, advertise and rent their condo in Mammouth Lakes, California from their home in San Jose, California instead of driving 5-½ to 7-½ hours each time. They argued that since the two worked full time, it was reasonable for them to use a private jet to fly there to use their time efficiently rather than rely on the one commercial flight a day to Mammouth Lakes.
The IRS argued that Mammouth Lakes was a vacation destination, and these trips were personal expenses.
Ultimately, the court decided that given the circumstances, and if the Frenches were flying there to personally manage their condo, the expense was reasonable and therefore, tax deductible.
Pets
If you just have pets “around to love on and spend time with, even if you feature them in a social media post, that animal wouldn’t be an eligible tax deduction,” said Catherine Kauffelt, head of tax compliance at Collective, an online back-office platform service. That includes emotional support animals, which aren’t considered service animals as they’re not specifically trained to support a condition.
However, there are some instances when pet-related deductions can be allowed:
- In 1995, scrap yard owner Samuel Seawright won a $300 deduction for cat food by arguing he had to set out cat food to attract wild felines to prevent snakes and rats from entering his scrap yard. The key here is that it was used for his business.
- In 2011, Jan Elizabeth Van Dusen won a $100 deduction for expenses related to fostering a cat. The expenses qualified as unreimbursed expenditures for services to a charitable organization, the court ruled. Note, however that expenses of $250 or more would need written acknowledgement from the charity.
- If you’re in the military, you can deduct the cost of moving your personal items to a new home, and household pets are treated the same as your other personal property, the IRS says.
- Expenses related to service animals may be deductible as medical expenses, the IRS says.
Unbelievable: Cat food and tanning oil? 6 outrageous tax deductions the IRS approved
Swimming pools and other health aids
If you just want to go to a gym to get some exercise or stay in generally good health, your membership won’t be deductible.
However, if your doctor prescribes something “to alleviate or prevent a physical or mental disability or illness,” you might be eligible for a tax break, the IRS says. That “something” can be a swimming pool, for example, if you need hydrotherapy to treat a condition.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
