Deductive reasoning for the modern taxpayer

It’s tax time, and every year I think to myself that I should be deducting everything. Really. All my income comes from freelance writing, and since there’s almost nothing in my life that I don’t write about, maybe I can deduct everything.

After years of thinking I should do this but not really doing it, I finally took action. I talked about my deduction plan with Anne-Marie Fisher, director of tax services for CBIZ.

Here’s a transcript of our conversation:

Me: “I spent a lot of money on expensive eye cream so that I looked good for my Yahoo! photo. Can I deduct that?”

Anne: “They don’t like cosmetics or clothing that they say you could use outside of your article.”

Me: “But I wouldn’t have had to look that good if I didn’t take the photo.”

Anne: “But you looked good after the photo. The IRS is really tough on things that help your appearance.”

Me: “What if the cream made me look bad?”

Anne: “That’s a very aggressive position.” (This is tax-preparer speak for “No! Don’t do it!”)

Me: “OK. Forget the cream. What about moving. I wrote a lot about how I moved from New York City to Madison, Wisconsin.”

Anne: “That’s a fine deduction. Just document that you did if for a job.”

Me: “But I didn’t. I can work anywhere. I did it because I was going to die if I had to live in a 500-square-foot apartment for one more minute.”

Anne: “Do you have more business opportunities in Madison?”

Me: “Well, there are a lot of writers in New York City and very few in Madison, so I’m more unique being from Madison and editors like unique.”

Anne: “That’s good.”

Me: “I write a lot about how you’ll have more career opportunities if you keep your rent low. The new American Dream is about having a lot of time, not owning a house. Can I deduct my rent?”

Anne: “That’s very creative.” (That’s CPA-speak for “You’re out of your mind.”)

Me: “Here’s something I did. I went through all my expenses last year looking for some that are big and don’t seem to be deductible. I saw that my son’s violin lessons are really expensive. And you know, violin teaches self-discipline, and self-discipline is important for workplace success. I could write that. Then could I deduct the lessons?”

Anne: “He’s still getting a lot of benefit from the lessons, though.”

Me: “What if I write that he hates them?”

Anne: “Well, if he hates violin and you put him in the classes specifically to write your column, maybe you could prove that he was really upset by you taking pictures of him.”

Me: [Silence. Obvious disappointment.]

Anne [in a perky, helpful voice]: “How about meals. Do you deduct those?”

Me: “Of course. But what about my brother? He guest blogs on my blog. Can I deduct meals with him?”

Anne: “Sure. As a way to thank him.”

Me: “What about the plane flight?”

Anne: “To go see him? Well, things like this are always worth asking about. It’s like gambling. Some people just never want the IRS to talk to them.”

A Roll of the Dice

At this point I decide I’m a gambler, so I call another CPA. Larry Rice, director of strategic consulting at Rodman & Rodman. I cut right to the chase:

Me: “What can I write in my column about toys so that I can deduct the toys I buy for my kids?”

Larry: “Maybe if you had a regular feature where you review toys. But you’d have to throw them out. If you kept them, the IRS would assume your kids got personal enjoyment from them.”

Me: “Could I throw them out later?”

Larry: “No, that wouldn’t work because there was personal enjoyment. The IRS lets you deduct only 50 percent of meals, for example, because while they’re for business, you still get personal enjoyment.”

Me: “Can I deduct 100 percent of the meals I had with people I hate?”

Larry: [Pause.] “When you deal with your taxes, you’re presumed guilty until proven innocent. You need to prove why you have the right to take the deduction.”

Me: “OK. How about the coffee shop I write in. I’m there every day and I don’t have a home office. Can I deduct my lattes?”

Larry: “The IRS has a term — ‘ordinary and necessary.’ You have to show that what you’re doing is ordinary and necessary for your business.”

Me: “OK, there’s an article about how my generation loves to work out of coffee shops and many of us don’t have home offices. We just have a backpack. So how about I send this to the IRS and tell them it’s a new day and they have to get with the program and large latte bills are ordinary and necessary for writers?”

Larry: “Maybe you could do it if you met with people related to your business regularly. The IRS publishes a 30-page book to help people determine if their home office deduction is legal, and it has very tight requirements.”

Me: [Long, dejected silence.]

A New Hope

Larry gives me a good idea. He says that IRS agents receive audit guides that tell them what deductions they should expect from a person in a given field, such as 10 percent of a writer’s income is spent on travel.

So I can get one of those guides, and at least make sure I hit the top levels in all those areas. It’s a new approach, and I have new hope.

Finally, a note to my mom: Please don’t call me to say the IRS is going to read this column and come after me. I know you’re going to worry. But you don’t need to. In fact, now that I’ve written about you worrying, the next time I have lunch with you and you worry about me, I think I’ll deduct it.