Doing Your Own Taxes? Here's How To Justify Expenses
April 15th: tax day in America. For so many of us, this day is up there with the Monday after the Superbowl, or the day after Labor Day weekend, as one of the worst days of the year. If you’re lucky, your job pays you via direct deposit, with the taxes already deducted. But for many, you make money all year and have to add it all up this week, deduct your justifiable expenses, and submit 4,000 pages of paperwork to the IRS. Or your parents’ accountant. And boy, that’s rough.
If you collect income from various sources, your goal should be to maximize your deductible expenses. If you spend enough money related to your work, you should be able to pay zero dollars to the government. That’s a banner year. Spend so much that you don’t have any money left to pay Uncle Sam. That’s how you build a successful business. Take Amazon, for example. They didn’t turn a profit for fourteen years. For FOURTEEN YEARS, Jeff Bezos sent the IRS a check for zilch.* And now? He’s the richest dude on earth, or at least he was until that divorce settlement. Not sure if he can write that off.
Now, you can go that route—spend more money than you make. The tax man can’t take forty percent of nothing. But that’s also a tough way to make money. “Hard to have money when you don’t have any money,” says math. A better solution is to become a master of justifying your write-offs. Play seven degrees of Kevin Bacon with your bacon. It’s super fun. Here’s my example:
As a comedian, my business is laughter. Therefore, any costs related to laughter are deductable. The other night, I was out to dinner with nobody because I’m lying. The waitress came by to ask me if I wanted to see a dessert menu. I said, “twist my arm!” This made her giggle because she has a low bar for humor. Here was a woman who certainly doesn’t need to send the IRS any money. It was neither a good restaurant nor a good neighborhood, and I sense that she lived nearby because I saw her walk home once her shift ended hours later. The point is, I threw out a joke, she laughed, and that turns the entire meal into an open mic. Not only do I get to write off the cost of the food and her 11% tip (she did a poor job of wiping down the table, leaving wet streaks from a rag I wouldn’t chloroform use to chloroform my worst enemy), I can write off the Uber to and from the restaurant, the clothes I bought for the occasion, and the wallet from whence I pulled the cash I was paid under the table by a charity gig. From a tax perspective, that was a $600 tuna melt.
Stonemason? Got you. Perhaps you take your family on a vacation, driving a Winnebago across the midwest, even though they don’t deserve it. You swing through Keystone, where the resolute visages of Roosevelt, Lincoln, Washington, and Jefferson oversee the pulse-quickening excitement of South Dakota. The project was conceived by Gutzon Borglum, whose name sounds clear when spoken underwater. He, of course, was a sculptor, and Mount Rushmore is carved out of stone. If you think you know where this is going, think again…
While visiting the park, your obnoxious son begs for a souvenir from the gift shop. He sets his greedy eyes on a snow globe that houses a miniature version of the attraction. You buy it and keep the receipt, planning to write that shit off, of course. The entire family piles back into the camper. Not ten minutes on the road, your son starts whining like Tinkerbell, complaining that his stomach hurts. You tell him to look out the window but his cries increase in pitch and volume. To teach him a lesson, you reach back, grab his snow globe, and throw it out the window. The souvenir explodes across the windshield of a Lincoln Continental, driven by an elderly man named Ferris. He swerves, hits a telephone pole, and dies almost instantly when his old head smacks against the steering wheel. By Ferris’ age, his skull is thinner and weaker than an overplayed ping pong ball. Truth be told, it defied science that he lived so long. Nobody will miss him.
The ensuing legal battle, waged by Ferris’ grandchildren not to honor him but instead to profit from his death, costs hundreds of thousands of dollars—far exceeding the salary and savings of a stonemason. But because the man died from a snow globe that you bought to placate your child on a trip to see a sculpture carved out of stone, every single dollar spent on lawyers and settlements can be written off for tax purposes.
Talk about a silver lining.
The point is, these connections can be tenuous. As long as you document them with expenses and reason, the IRS won’t look too closely. They have much bigger fish to fry. Worst case, they audit you. Then what? Does anyone know what it means to be audited? Play dumb. Everyone gets one hall pass on their first audit.
Happy tax day. Now go buy something nice.
*This is probably false.