Tax Tips: Outrageous Deductions and Refunds
Meet a South Carolina couple who tried to deduct cat food and got away with it.
April 6, 2009— -- It's that time of the year again: tax time.
You probably won't hear families across the country cheering, unless they are getting giant refunds.
So before you sit down to calculate your income, deductions and ultimate tax liability, learn a few tips about how you might be able to get a bigger refund, or at the least take the sting out of that tax bill.
For as long as there have been taxes, people have tried to cheat the taxman.
Consider the Virginia man who tried to write off the cost of 120 Super Bowl tickets. Or the South Carolina couple who attempted to deduct the cost of cat food. One was legitimate; one wasn't. You might be surprised.
But first, how about some more mainstream ideas on how to save some cash?
As part of the housing bailout bill passed by Congress, homeowners who do not itemize their taxes can claim a property tax deduction of $500 or $1,000 if they are married and filing jointly, in addition to the standard deduction.
And, if you were a first-time home buyer in 2008, you may be eligible for a tax credit of up to $7,500 or 10 percent of the purchase price, whichever is less.
There is an important catch to this credit, though. You have to pay it back in the next 15 years, in equal amounts each year, which makes it a bit more like a loan than a credit. So if you took the maximum credit of $7,500, you would need to pay back $500 per year for the next 15 years. But it still helps you get some much needed cash now when the economy is so bad, and you can pay it back a little at a time as things get better.
If you were laid off in the past year, most of the expenses incurred while looking for a job can be deducted from your taxes, so carefully track these expenses. For example, any money you spent on creating and mailing your resume is deductible. You can also deduct expenditures for career coaches and headhunters. You can even deduct long distance or cell phone charges related to the job search, as well as travel expenses incurred for interviews, including mileage.
