Surprising ways the tax code has been under and over utilized.
Late-night talk-show host David Letterman has delighted audiences with his wry, subversive sense of humor for an impressive 33 years. But this week he bids us farewell. We’ll remember him for his Stump the Band bits, his Stupid Pet Tricks, and — most of all — his Top 10 lists. So here, in Dave’s honor (from the Home Office in Wahoo, Nebraska), we present The Top 10 Taxing Words That (Sort Of) Rhyme With “Tax.” Drumroll, please!
10. Cadillacs: Americans love to drive. Why else would we invent interstate highways, suburbs, and traffic jams? (So many traffic jams.) Good thing our friends at the IRS are happy to help you roll in style, with a choice of deducting “actual expenses” or 57.5 cents/per mile.
9. Cracks: Our bridges and highways are riddled with cracks.
So the Highway Trust Fund collects a tax.
But the cracks are spreading too fast for that tax.
And Congress refuses to face those facts.
(Some folks think Congress is stuffed full of hacks.
Maybe it’s time to give them the ax?)
8. Anthrax: If you find life-threatening poison powder in your mail, you’ll want to call 911, pronto. But don’t worry about that pesky hospital bill. You can use a Section 105 Medical Expense Reimbursement Plan to write off all your medical costs as a business expense!
7. Goldman Sachs: America’s most hated company has paid literally billions in fines since 2008. But they still managed to squeak out $8.48 billion in profit last year. And they paid 31.4% of that haul in taxes. So we’re guessing at least the folks at the IRS still love them.
6. Craps: Not technically a rhyme, but close enough. While gambling winnings are taxable as “other income” on Form 1040, you can deduct gambling losses up to your total winnings, on Schedule A. Beyond that point, however, the tax still acts on your fat stacks.
5. Cracker Jacks: Candy-covered popcorn and peanut treats with a prize in every box. Bonus fun fact — some historians consider them America’s first junk food! But whether that’s true or not, you can’t buy them in most states without paying sales tax.
4. Whacks: Tony Soprano and his colleagues hire professional killers to resolve business disputes “out of court” — because it’s faster than filing a lawsuit and generally cheaper than hiring a lawyer. Good news: code section 162(a) lets business owners deduct “ordinary and necessary” professional fees. Bad news: the Supreme Court says no deductions are allowed for expenses that violate public policy. Sorry, Tony — looks like if you wanna whack Paulie Walnuts, it’s gotta be on your own dime.
3. Saks: Saks Fifth Avenue stores have been outfitting fashionable men and women since Horace Saks and Andrew Gimbel opened their first location in 1924. Looking good can definitely help advance your career, of course. But does that mean you can write off the dress you wear to impress? Sorry, but no . . . Uniforms and work clothes are deductible only if they’re not suitable for ordinary street wear. Maybe if we got a deduction, it wouldn’t hurt so much to pay retail!
2. Yaks: Foodies are constantly foraging for the newest food fads. (You don’t think anyone really likes quinoa or kale, do you?) Maybe it’s time for our ranchers to look towards the Himalayas. Tibetans have used yaks for centuries for meat, milk, fiber, and fuel (don’t ask). In parts of the region, they even race the poor beasts. Best of all, yaks domesticated over here should qualify for generous dairy subsidies!
And the number one taxing word that sort of rhymes with tax: “Relax!” We’re here for you. There’s nothing funny about paying more than you have to — that’s why we give you a plan to pay less. So give us a call, and see how many words you can think of that rhyme with “savings”!
Marc Steiger is a CPA and partner in Capital Advisory Tax Services and owner of MaidPro of Northern Cincinnati.