Thursday, November 29, 2007


You know, the answer to just about any tax question that begins with “can I deduct” is “it depends”. And I do mean just about any question.

Can I deduct my cat? The obvious answer is a definite no (and certainly not as a “dependent”). But what about the owner of the cat who plays Morris in the tv commercials. The cat is what generates the income of his owner. And did you know you could deduct the cost of moving the family pet to a new home, if the move itself is deductible (I think I mentioned this in an earlier post).

Similarly, can I deduct cat food? Again one would expect the definitive answer to be no, except for Morris above. But a business deduction has been allowed for a scrap yard owner who used the food to attract wild cats who would chase away mice and snakes from the yard (Samuel T. Seawright, Et Ux., (2001) 117 TC No. 24).

Almost all “can I deduct” questions – such as can I deduct my cell phone or my car or my answering machine – requires that I ask the question, “Do you use it for business?” But not all.

Can I deduct commuting? The usual answer is no. But in T.C. Summary Opinion 2004-74 the court upheld that transportation costs to and from work are allowed as a medical deduction under Section 213 if the employment itself was explicitly prescribed as therapy to treat a medical condition. And you can deduct travel between home and a temporary work location (the job is expected to last and actually does last for one year or less) that is outside of the “metropolitan area” where you live and normally work.

Can I deduct the cost of a wig? You can if prescribed by a doctor for your mental health when hair loss was caused by a disease or accident. And many years ago we had a client who we called the “wig lady”. She was an undercover store detective who posed as a shopper to catch shoplifters, and often wore disguises in the course of her work – including wigs.

Can I deduct clarinet lessons? You can deduct both the clarinet and the lessons if prescribed by a doctor or dentist to help correct an overbite (Rev Rul 62-210).

Pretty much anything that a qualified medical professional will explicitly prescribe to treat a specific medical disease or condition will be deductible.

Can I deduct mortgage interest depends on the nature of the mortgage (acquisition debt or home equity), the amount of the loan principal, the purpose of the loan, and the number of personal properties you own. See my post on “So What Do I Think?”.

The answer to “Can I deduct my real estate taxes” is not always yes. It depends on whether or not you actually own the property and are liable for the taxes. However, there have been occasions where a person whose name was not on the title could deduct the taxes (i.e. a married couple live in and pay all the bills, including mortgage and taxes, for a home whose title is in the name of the husband’s parents).

Can I deduct charitable contributions now depends on whether or not you have the proper documentation as well as to whom the contributions are made.

And, of course, you can only deduct many of the above items if you are able to itemize on Schedule A – and medical or miscellaneous investment and job-related expenses are only deductible to the extent they exceed a percentage of AGI.

So, can you deduct dry cleaning? It depends!


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