Dreaming of What Might be Tax Deductible Someday

If you are like me, just the simple task of pulling documents together for the annual chore of tax preparation can be a bit of a grim experience. So, this year, I encourage you to flip your thoughts upside down and dream a bit about what could be instead of what is.  

While Congress enacts and modifies tax laws primarily with the intention of increasing revenue, it also tries to influence consumer behavior and direct or reinforce social policies. For a few minutes, I invite you to have a little fun with me while we explore an alternative universe of things you might dream could be tax deductible. 

As a quick refresher, the Schedule A on your Federal tax form is where you normally address the areas of medical and dental expenses, gifts to charity, casualty and theft losses, and other itemized deductions, if they are collectively sizeable enough.  So, let’s take these 4 categories and you can play along…

The Medical and Dental Expenses Category

Right now, almost all current eligible expenses are related to curative care, and there are many limitations. It makes this category difficult for most taxpayers to realize any benefit. However, wouldn’t it be good if some preventative steps were deductible for the purposes of this hypothetical discussion? For instance, the expense of taking a vacation each year, joining a health club, or even paying for higher-quality foods. If more nutrient-dense food sold in stores and restaurants were considered tax deductible, you can imagine how it would alter everyone’s eating habits.

In your fantasy world, you could also address the importance of emotional care and well-being. Would you like to claim the cost of your hairstylists or barber as a deduction? Imagine how wonderful it would be if everyone had new haircuts or shaves for men that were of barbershop caliber. Of course, the price of your high-end shampoos and specialized hair treatments should be deductible. Tax deductions would also be available for facials, massages, pedicures, and manicures. While you’re at it, I’m sure you would enjoy the cost of paying someone else to clean your house, mow your law, or remove your holiday decorations. Don’t you think that would improve your overall health and well-being?

If you own pets, you undoubtedly concur with me that expenses such as veterinary bills, specialty food, and grooming should be tax deductible. This seems like a reasonable request because dogs improve our physical health (because many of them need daily walks) and mental health (since they are always delighted to see us).

While you don’t want to get too carried away this category, I’m sure just thinking along these lines has already made you feel better. Feel free to add to the above list, and since you are having fun, you might as well go off the deep end dream a bit about a little shopping spree. I seem to recall reading a study years ago that small purchases help, at least momentarily, to lift one’s spirits. Wouldn’t it be wonderful if your “retail therapy” expenditures could be recognized as medical expenses?

The Gifts to Charity Category

We are fortunate in that our tax laws do have many avenues to qualify for charitable giving deductions. However, wouldn’t it be wonderful if Girl Scout Cookies® could be tax deductible? (Keep in mind that purchasing cookies is not deductible, but donations to the Girl Scouts are.) Many years ago, before donations required receipts, several CPAs I knew claimed their Girl Scout Cookie purchases as charitable donations. They understood very well that this was not a cost that could be deducted, but because they thought it was such a worthwhile endeavor, they did it anyway. I suspect they may be the reason why we now have such stringent requirements for documenting charitable donations.

The Casualty and Theft Losses Category

This is an important category that is often overlooked. According to the Internal Revenue Service (IRS) website, a casualty loss is defined as follows: 

A casualty loss can result from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or volcanic eruption. A casualty doesn’t include normal wear and tear or progressive deterioration.

I hereby give you full permission to expand this category immensely. Imagine if you could deduct the cost of something you bought, but later realized you didn’t really like. Wouldn’t that be lovely? Have you ever overpaid for a product or service? Wouldn’t it be awesome to simply deduct the difference in the price of what you paid verses what you should have paid?

The expression “I broke it, so now I can deduct it” might also appeal to you in this tax dreamland.

The Other Itemized Deductions Category

Hmmm…this is a category that very few people can utilize right now. “The ability to deduct gambling losses to the extent that you have winnings” is the only one I’ve seen. That doesn’t sound like good social policy. If Congress was thinking long term, this is the category in which individuals could really be rewarded for their positive contributions to society.

For instance, they could consider rewarding people for having children. You can imagine that deducting the cost of diapers would probably be appreciated by young parents. Additionally, wouldn’t it be helpful if we included the cost of children’s clothing, food, babysitters, and Mom’s Day Out? Imagine if we could deduct the costs of our dependent children’s camps, sports equipment, and lessons. You can almost visualize the wide range of small businesses that would spring up to help parents raise their children. Theoretically, there would be numerous advantages in this fantasy land: bolster social security, stimulate the economy, and ensure that children are never bored. Oh, if Congress could only have such foresight!

Back to Reality

…Okay, back to reality. We trust the little exercise above gave you a few chuckles. We hope that as you are gathering your tax documents this year, you continue to have a little fun and focus not only on the reality of how things are, but what could be (in your dreams of course…)

While we can’t change the tax laws, our goal is to help make your tax return preparation as painless as possible. To the extent that we can assist you, please feel free to reach out to us.

Kristina Bolhouse, CPA/PFS, CFP®

Vice President/Shareholder

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