Now that’s a strange tax law
April 21, 2014
by Brian Wolf

Well it’s official. The 2014 tax season is over; at least for some.

According to CNN Money, as of last week, nearly 100 million tax returns had been filed. This represents roughly three-fourths of all the tax returns that the IRS is expecting.

For all the procrastinators who didn’t get around to filing your tax return, there is some good news. It may not matter much if you are expecting a refund, because the government won’t charge you a late fee if they owe you money. However, if you owe them money, then the IRS is very interested in getting not only what is owed, but penalties and interest, as well. So far in 2014, about 12 million taxpayers have requested extensions. This number obviously rises dramatically in the last few days before April 15.

CNN Money also reports that the average refund is $2,792, up 1 percent from last year, with nearly 90 percent of all returns submitted electronically this year.

Our tax preparers often get asked about the odds of getting audited. People seem to think that it’s an impending doom that they will have to endure. Although the chance of being audited is estimated at less than 1 percent, the IRS knows that it is still a very effective deterrent for most Americans.

Some common triggers for the IRS include overstating your charitable donations; being a millionaire; and claiming the Earned Income Tax Credit, a commonly abused credit. Claiming strange deductions will also raise eyebrows.

In the CNN Money article, it listed some strange write-offs that have failed over the years include airfare for a pet, a birthday party, and pantyhose. But, others are perfectly acceptable, even though they may sound bizarre. Hermit crab food, scuba trips, and Viagra for a woman were all given the green light by the IRS. Very strange indeed. You can even claim a boyfriend or girlfriend as a tax break, but your significant other will have to earn less than $3,900, live with you year-round, and you must pay for more than half of their expenses.

The Christian Science Monitor also had an article that listed some strange tax laws, including deductions for donating a deer carcass in South Carolina, clarinet lessons, and pet moving (it counts as a personal affect).

Kansas has one tax rule that is fairly strange, as well. Hot air balloons not tethered to the ground get a tax break.

Here's how it works: Kansas taxes sales of admissions for “any place providing amusement, entertainment or recreation services.” However, under the federal Anti-Head Tax Act, states and local jurisdictions are prohibited from imposing fees and charges on airlines and other airport users. So, in 2010, Kansas tackled the question of whether hot air balloons should be subject to the state or federal law. The result? Hot air balloons that are tethered to the ground – and stay there – are taxed, because technically their occupants don’t go anywhere. Hot air balloons that are piloted “some distance downwind from the launching point” – i.e: the ones that actually travel – don’t have to pay the amusement tax. So, if you want to take a tax-free ride in a hot air balloon, make sure it's actually going somewhere.

My personal thoughts on our tax structure are that it’s unbelievably convoluted and makes very little sense, but it’s our system, and for better or worse, it’s here to stay.

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