Interest-ing Tax Relief and Doggie Deductibles

Weekend Assignment #55: The IRS, in its infinite wisdom, is allowing you to deduct one thing from your taxes that you haven't been able to deduct before -- anything you'd like. What do you deduct and why? Yes, anything. And your reason for deducting it doesn't even have to be good -- this isn't an audit, you know. I'm just curious as to what you'd pick.

Extra Credit: Do you wait until the last minute to do your taxes? Or did you have them done ages ago?

Once again this week, I'm making two passes at this assignment.  The first one isn't really new, but a revival of an old deduction.

1. Credit Card Interest
Once upon a time, taxpayers were allowed to deduct interest on credit cards.  I wasn't doing the taxes then--that task used to fall to John or (when John co-owned a business, and for a year or two thereafter) an accountant.  But I remember gathering all the January credit card statements for tax time.  At the bottom of each would be

The total interest you paid on this account in 1989 was $768.89.

or whatever.

The credit card interest deduction was taken away years ago.  Now John and I are many thousands of dollars in debt, half of it to credit cards, and that deduction would help a lot.  This isn't a humorous answer, I know, but I feel pretty strongly about it.  It would help to offset the situation caused by banks offering too much easy credit, jacking up interest rates to people who can't afford it, and then lobbying Congress, successfully, to make it extremely difficult for people who are drowning in debt from credit cards or medical expenses to get out from under through bankruptcy.

Okay, you want something more amusing?  Then how about this?

2.  Dogs should be deductible.

Dogs perform a societal benefit.  They deter burglars, lower blood pressure, provide companionship, assist the disabled, guard the family, amuse visitors, help police, and give me something to blog about.  In recognition of this, the following expenses relating to the acquisition and care of dogs should be deductible:

• Dog adoption fees or breeder fees (no deduction to buy from a puppy mill)
• Dog licenses
• Dog food and treats, possibly limited to a reasonable total to discourage doggie obesity
• Dog household expense (food and water dishes, dog bed or blanket, dog house, doggy door)
• Dog apparel and grooming (leashes, collars, a jacket if legitimately needed for that breed in that climate, brushes, combs, toothbrushes)
• Veterinary and boarding fees
• Spaying and neutering costs
• Dog training
• Dog funeral expenses (cremation or burial)

I think Tuffy is well worth that!  For 2004, I'd just have the vet, food and license to report.  In other years, at the beginning or end of a dog's life with us, these plus the other items would add up to a sizable deduction.

Yes, you can deduct your cat expenses, too, under my plan.  However, you can't deduct your pythons or tarantulas, because they don't pass the societal benefit test.

Extra Credit:  I just finished the taxes before writing this entry.  I might have finished last night, had I not been missing the 1098 from the mortgage lender.  I've had at least three paper-sorting sessions recently, each several hours long.  I've thrown away a ton of stuff, but I didn't find everything I needed.

And I just realized that I forgot to correct downward the stipend amount St. Michael's gave me last year as church webmaster. Oh, well, too late now.  I already e-filed.

While I'm on the subject:

Last year was the first time I EVER did my taxes.  That may sound crazy, given that I just took a degree in accounting, and have been in the labor pool nearly every year since 1974.  But when I was in high school, my mom paid me not to file, on the grounds that it wasn't required for the pittance I made, and I'd have to do it soon enough.  In college, I made something like $12 a month reading to a blind graduate student.  Again, not enough to bother with. 

After that I was married, and John did the work.  When he owned a business with W, it got to be too complicated, and the job went to a CPA.  I don't know whether it was W's bookkeeping or an error by the CPA's assistant, but one year we had to pay thousands of dollars in income taxes.  That year, John had made some money, but not enough to justify that big a tax bill.  A decade or so later, I still don't know exactly what happened, or how, or who was to blame for it.  I'd never done the taxes, I didn't see the figures, and at the time I'd never taken a bookkeeping course, let alone accounting courses in income tax.  But this was the event that started the ball rolling on the serious debt we're in now. 

Last year at this time, I'd been blogging less than a month, and I think I had two readers.  John insisted that as an accounting student, I should be the one to do the taxes, and I agreed.  I had not yet taken the one little tax course in the UoP accounting curriculum, but there was no business to account for, no estate of my mom's to be settled.  So I bought TurboTax.  A fellow student helped me get started, and I finished on my own.  It was remarkably easy.  I was so enthusiatic that I wrote a blog entry called Hooray for Taxes!, about how easy it had been, and how worthwhile and necessary it was to support the government financially, despite some of the less-than-wonderful stuff it does.

The next day, I decided that it was kind of an insane, naive, nerdy, toadying thing to write, and might get me audited.  So I deleted it.

This year, TurboTax had us sitting at $1304 federal tax due until I figured out, on the third try, how to get my lifelong learning credit into the program. Somehow either the program had skipped that part or I'd missed it.  Fixing this took us into refund territory, but only on the Federal.  We owe the state, as usual only more so.

John was nervous about my taking so long, and wondered whether I was messing it up.  He wasn't the only one.  I thought briefly that I'd missed a major deduction, and would need to file an amended return.

No, it wasn't so easy this time around. 

Karen

Tags: Weekend Assignment, Income Tax, Deductions, Dogs