The Internal Revenue Service collects income taxes from U.S. workers but offers a variety of tax deductions, which can reduce taxes owed and result in tax refunds. A tax deduction reduces your taxable income, which in turn, reduces your tax burden by the amount of the deduction times your income tax rate. Certain deductions such as property taxes and home mortgage interest are well-known, but the IRS offers many less common deductions that some may consider bizarre.
Gambling Losses
Gambling is an inherently risky activity, but the IRS offers tax deductions that can lessen the financial impact of gambling losses. According to the IRS, gambling losses up to the amount of gambling winnings are deductible on federal income tax returns. In other words, if you spend $100 gambling and win $80 total, you can deduct $80 on your tax return. The IRS recommends that gamblers keep a diary of winnings and losses so that you can claim deductions on your tax return.
Breast Surgery
The IRS allows taxpayers to deduct medical and dental expenses if services performed go toward correcting physical or mental defects. In some cases, breast reduction surgery may be necessary to alleviate physical problems like chronic back pain. The IRS also allows taxpayers to write off various expenses related to their business or trade. TurboTax states that a stripper was able to deduct the cost of a breast augmentation surgery by claiming that her surgery was akin to a stage prop.
Ponzi Schemes
The term "Ponzi Scheme" describes schemes aimed at defrauding well-meaning investors out of money. The schemes may involve lying to investors about returns, and using money gained by new investors to pay returns to original investors. Ponzi schemes are often carried out by well respected Wall Street insiders that are able to convince individuals and organizations to give them money to invest. According to the IRS, losses from Ponzi-type investment schemes are deductible in the year that the scheme was discovered.
Trips to Exotic Locations
The IRS allows taxpayers to deduct travel expenses related to business, including conventions and business meetings in exotic locations. TurboTax states that business-related travel to locations such as Bermuda, Barbados, Costa Rica, Dominica, Grenada, Guyana, Honduras, Jamaica, and Trinidad and Tobago are eligible for tax deductions, even if there is no special reason the meeting or convention has to be held where it is.
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