Tax Tips: Outrageous Deductions and Refunds

You must still pay all the taxes you owe on April 15, or you will incur interest charges. Filing an extension should not be done in place of not filing a return at all. It's not a way to defer payment. So, if you know you can't pay your taxes, you'll need to set up a payment plan.

Paying by Credit Card

More and more people are paying their taxes by credit card this year.

This may seem like a good idea but you will likely be charged a convenience fee of a 2.49 percent on your entire tax bill by one of the approved service providers handling your payment.

That's a hefty surcharge.

On average, Americans owe about $2,200 to the IRS, so with the convenience charge your total amount owed would be $2,255.

First, that's an extra $55. It might not seem like much, but every extra dollar counts these days.

Second, if you don't pay off your credit card bill in full, it will really cost you. If you only paid the monthly minimum on this balance, and you had an average interest rate of 12 percent with a minimum payment requirement of 2.5 percent, it would take you almost 14 years to pay off this debt and you would end up paying an additional $1,350 in interest.

'Creative' Deductions

Now on to some of the more, let's just say creative, deductions. Over the years, American taxpayers have tried just about everything and anything to avoid paying the government more money.

Super Bowl Sales Seminar

You can't blame a guy for trying? Well, if you are the IRS, you can.

Back in 1981, Danville Plywood, a Virginia company, sponsored a 1981 "Super Bowl Sales Seminar" where it flew 120 people including customers and some employees along with their spouses and children to New Orleans.

They paid for airfare, hotel rooms, game tickets and even threw in an outing to the French Quarter.

The company claimed a $103,000 deduction, saying it was an advertising cost. The tax savings: $45,000. The courts ultimately found the expenses had nothing to do with Danville's business and rejected the deduction.

Tax-Free Safari?

O. Carlyle Brock, president of the Sanitary Farms Dairy in Erie, Pa., tried to write off the cost of a six-month hunting trip in Africa with his wife.

Before you call this a scam, consider this: Brock said there was a legitimate business expense.

You see, the dairy -- which bought, processed and sold milk -- ran advertising around the theme of wild animals. Customers were served game dinners at the plant, they shared films of the hunt and displayed heads and skins from hunts in their own museum for the public. They donated a tiger from the Africa trip to the Erie zoo and held a "name-the-tiger" contest. The IRS ruled the trip was a legitimate expense.

Is Laundry Deductible?

Ever think about trying to write off the cost of doing laundry, buying various bath and skin oils or even your daily shampoo? How about your gas and electric bill?

How, you ask? As medical expenses.

In 1968, Earl T. Jefferson tried to deduct all those items after his doctor suggested he sit in tubs of hot water to treat his prostatitis and that he wash his hair and scalp three times a day.

So he said that buying all those products and heating his shower water were actually medical expenses. The IRS and, subsequently, the courts didn't agree, declaring the expenses to be personal, living and family expenses and, therefore, nondeductible.

Nice try.

Special Dentures

Then there is the case of the $3,500 dentures.

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