Let's begin with cars, certainly a business necessity in Los Angeles and many other places. Yes, you can deduct the portion of mileage you drove for business purposes, but you can't deduct the cost of any traffic violations you may have committed in the process. After all, you always have a choice about obeying the law. But that didn't cut any ice with an actor who wanted to write off a speeding ticket that she received on the way to an audition in Florida. Her reason? She started out in New Hampshire and "was running late."
Then there was the guy trying to claim 25,000 miles in business usage for two years when the car hadn't even been driven 20,000 miles. Earth to guy: The records exist. But perhaps the strangest car expense was a request to write off the cost of a drunken-driving charge. After all, the actor insisted, he was stopped on the way to an audition. It should tell you something about his career that he was still angry about having had to miss the call.
What does it say for a young actor's skills when she determinedly argues for the validity of writing off $3,500 for her recent plastic surgery? "I won't work without it!" she cried. Repairing injuries from a traffic accident, perhaps? Nope. It was a boob job. And that's just what she was for trying to take the deduction
There is a limitation of $25 per person per year for business gifts. Admittedly, it's a ridiculous amount that hasn't been increased in far too long, and that prompts people to try to stretch the rules. One actor was upset that we wouldn't allow him to write off all his numerous gifts to a certain producer; after all, he had spent a great deal of money. Of course, she just happened to be his fiancée. In a similar vein, there was the actor who wanted to write off a $100 gift to a casting office by claiming it was for everyone at the firm. Then he handed me a receipt for a single gift card from Frederick's of Hollywood.
Pet owners often look for ways to deduct the high cost of caring for their animals. One attractive young lady was told by her former preparer (who, she admitted, had a crush on her) that she could take a rather large deduction as "security costs." It turned out to be the medical expenses for her two 14-year-old arthritic German shepherds.
It's no fun to ask a female client her age, but there are certain tax breaks that depend on it. Originally, one proof of identity demanded by the e-filing system (the electronic submission process used by the Internal Revenue Service) was the taxpayer's birthday. Remarkably, two longtime married clients had their joint return rejected because her birthday didn't match the IRS's records. After I explained this to the woman, she first asked if the birthday was all that necessary. When I said yes—or else the return would have to be mailed, delaying their refund by up to six weeks—her voice got very quiet. "Add 10 years to my birthday," she said. Hubby's eyes got very large.
Let's see out the 2010 tax year with a pearl of wisdom from the late Supreme Court justice Hugo Black: "The United States has a system of taxation by confession." Well, they do say that confession is good for the soul. So be smart: Stay on the straight and narrow in all your dealings with the good ol' IRS.