Robert J. Fedor, Esq., L.L.C.

Yes, the IRS does review itemized tax deductions

When filing a tax return, the Internal Revenue Service allows taxpayers the option of either taking a standard deduction or itemizing tax deductions. While itemizing deductions can potentially save an individual hundreds or even thousands of dollars, there are many restrictions and standards of proof that must be met in order for an expense to be considered a legitimate tax deduction.

On its website, the IRS offers a list of common itemized deductions taxpayers are allowed to take. Included in this list are home mortgage points, business-related expenses and educational expenses. The website provides examples of expenses the IRS considers to be eligible for tax deductions. Individuals who take deductions that are subsequently found to be illegal may face fines, penalties and even criminal charges.

When deciding whether or not an expense is indeed deductable, an individual would be wise to consult the IRS's website or consult with a trusted tax professional. Most individuals would likely not consider cat food or a swimming pool to be legitimate tax deductions. In certain cases, however, even seemingly extraneous expenses may be considered legitimate medical or business deductions.

Take for example the case of man who was diagnosed with emphysema. The man's doctor recommended he begin swimming daily to improve his breathing so the man installed a swimming pool. Believing the swimming pool to be a legitimate medical expense, the man proceeded to deduct the costs associated with the purchase, installation and maintenance of the pool. The IRS, however, took question with classifying the pool as a tax deductable medical expense. In the end, the man triumphed and was allowed to take the sizeable deduction.

Another case included a couple who deducted expenses related to cat food used to attract stray cats. The couple owned a salvage yard and wanted to attract the cats to control the mice and rat population. When questioned about the cat food deduction, the couple maintained the food was necessary in providing for a safer environment for customers. The courts agreed.

These examples are just some of the many cases involving taxpayers who triumphed in challenging the IRS about tax deductions. It's important to note, however, that the penalties for taking false deductions can have serious consequences. It's wise, therefore, that taxpayers who have questions related to tax deductions consult with a tax professional.

Source: Forbes, "Careful, You File Taxes Under Penalties Of Perjury, They're Not An Opening Offer," Robert W. Wood, Feb. 10,, "Tax Topics - Itemized Deductions," 2014

No Comments

Leave a comment
Comment Information