With April only a few months away, it's never too early to start thinking about taxes. But while certain tax laws are fairly well-known, there are some rules on the books that will probably come as a surprise. Here are a few you probably never knew existed.
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1. The IRS can revoke your passport
The IRS doesn't tend to go easy on filers who owe money but don't pay. You may have even heard that the IRS can go so far as to garnish your wages if your balance remains outstanding. But what you probably didn't realize is that the IRS can also revoke your passport privileges if you owe the agency money. Thanks to rule a titled "Revocation or Denial of Passport in Case of Certain Tax Delinquencies," the IRS now has the power to take your passport away if you owe $50,000 or more in taxes.
2. Your swimming pool might qualify as a tax deduction
Though home improvement projects typically aren't tax deductible, if you have a medical condition that swimming can help address, you may be able to write off the cost of installing a pool. Specifically, you're allowed to deduct the amount of the expense that exceeds the amount by which your property's value is increased. As an example, imagine you pay $40,000 to install a swimming pool in your backyard, which increases your property value by $20,000. The remaining $20,000 can be deducted as a medical expense on your taxes provided you have written proof that the pool serves a health-related purpose.
3. Clarinet lessons could be tax-deductible
Is your child a budding performer? If he or she has an affinity for the clarinet as well as an overbite, you may be in luck. A 1962 provision set the stage for parents to deduct the cost of a clarinet after orthodontists proved it to be an effective overbite treatment. Lessons need to be prescribed by a dentist or orthodontist for your instrument to count as a tax deduction, but as long as there's documentation in place, you might get away with writing off your child's new hobby.
4. Losing weight can also slim down your taxes
Many people tend to have weight loss on the brain this time of year, but what you shed in pounds, you might gain in tax benefits. If your doctor confirms that your current weight is dangerous to your health, you can deduct the cost of whatever type of weight loss program you choose, whether it's a commercial plan or a medically supervised center. In order to take the deduction, however, your medical expenses for the year must exceed 10% of your adjusted gross income (AGI). So if you pay $6,000 for a weight loss program and your AGI is $50,000, you can take a $1,000 deduction in total.
5. You can write off the cost of fostering a pet
Many animal lovers foster pets who need temporary care while shelters or organizations seek out permanent owners. If you're willing to foster an animal, your out-of-pocket pet care expenses, such as food, medication, and veterinary care, can serve as a tax write off provided you're working with a registered non-profit charity or agency.
6. (Very) short-term rental income is tax-free
The IRS typically takes a chunk of whatever money you bring in, and rental income is no exception. But if you own a home that you rent out for 14 days or less throughout the year, any income you receive is completely free and clear of taxes. There's another catch, however -- you also need to live in that home yourself for 15 days or more.
Know the rules
While these quirky tax laws might make for some interesting reading material, most of them don't apply to the majority of taxpayers. That's why it's important to read up on the tax laws that may be relevant to you. Specifically, it pays to learn more about tax deductions and lesser-known taxes you might be subject to. You should also explore the different tax credits that could put thousands of dollars back in your pocket this year. Finally, pay attention to the things that might increase your chances of an IRS audit. The more prepared you are going into tax season, the more trouble you'll avoid and the smoother the filing process will be.
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