Let out your inner tax nerd! These 10 wacky tax laws are fun anytime of the year. You might even get a few hot tips that you can take to the bank come tax-time.
With your W-2 in hand and a year’s worth of receipts, you might think you’ve got everything you need to get your taxes done. But do you know the ten wackiest tax gems hidden in 3.8 million words of the federal tax code? Of course not, no normal person has the time (or inclination) to read those. Find out the 10 fun tax facts that will lighten your tax prep and—who knows—may even let you in on a new deduction this year.
Why you shouldn’t wear your red nose to the opera
Ever wonder why a clown’s costume is a deductible expense, but your business khakis aren’t? It boils down to multi-use: if you can wear your work clothes outside your business setting, they’re not deductible.
Sell bath salts the legal way
Ever since Al Capone was busted for tax evasion, criminals must think extra carefully about paying their taxes. In 21 states, there’s even a tax on illegal drugs. Drug dealers are required to contribute their tax payments anonymously, and in exchange they get a stamp. If they’re caught and don’t have this stamp, they’re in double trouble. On the other hand, dealers can deduct the cost of their product as a business expense (sorry, peripheral expenses like baggies, burner phones and security detail don’t count).
Call me Ishmael, CPA
According to a 2004 law, whaling captains can claim up to $10,000 in tax deductions for ship repairs, equipment purchases and whaling expenses. But before you try claiming this deduction or go out and buy a boat, be warned: whaling is banned in the United States, with exceptions for Native American cultures.
Is this my beautiful house? Also, why is my beautiful house on fire?
Having your house burn down isn’t all bad, at least, not in one highly specific case. If you donate your land and house to your local fire department for them to burn in a training exercise, you can deduct the loss on your taxes. It has to be true charity though: if you only donate the house and keep the land, you’ll be left with a charred loss and no deduction.
You’ve heard of historic building registries, but what about tree registries? Hawaii rewards its residents for taking care of trees judged to be “exceptional” by a certified arborist. If your tree has “historic or cultural value or that, by reason of its age, rarity, location, size, esthetic quality, or endemic status, is deemed worthy of preservation”, you can deduct up to $3,000 for care and maintenance expenses.
Paging Katniss Everdeen. Katniss Everdeen to the white courtesy phone
There’s been a lot of talk lately about gun control laws, but did you know there’s an excise tax on arrows? Arrows that are more than 18 inches long, or that are made for bows with a certain draw, are taxed 42 cents per shaft. This money goes towards wildlife restoration, which is great news for hunters and other nature lovers, and bad news for teenage Hunger Games participants.
Start charging those couch surfers
If you rent out a space for fewer than 15 days in one calendar year, all that rental income is completely tax free. This means if you’re planning on going on a two-week vacation, feel free to rent out your house and put more of that money towards travel and souvenir expenses. Or just collect a little extra cash from your couch-surfing friends (and it couldn’t hurt to make it clear that their checkout day should be before the 15-day time limit).
Bambi is so moving to North Carolina
South Carolina offers a $50 tax credit to butchers for each deer carcass they dress and then donate to charity. The venison donor must be a licensed packer, butcher, or processing plant, and the donation has to be pre-arranged (that is, it can’t just be discarded venison). Feeding the needy, managing deer populations, and gaining a tax credit—it’s a win-win-win!
Weep for Kobe Bryant
The life of a sports hero isn’t all perks. Professional athletes have to pay state income taxes on the money they make in the states where they play. California was the first state to impose the so-called “Jock Tax”, but roughly half the states have followed suit since. About 2% of whatever the athletes earn on the games they play in the local area goes back into those local communities.
You don’t look a day over 95
And a very happy 100th birthday to you! If you’re 100 or older and live in New Mexico, you are exempt from paying state income taxes (as long as no one can claim you as a dependent, that is). Who says tax law can’t be a thoughtful birthday gift?