Everyone wants to lower their tax bill—but sometimes people try a little too hard. Over the years, taxpayers have concocted a lot of zany arguments to justify their tax breaks. We’ve come up with 15 of the most creative ones that the courts decided did not quite work.
Paying taxes… Everyone wants to know if there are ways to avoid them, but some take this endeavor more seriously than others. They’ve even come up with rather interesting ways to try and avoid paying what they owe to Uncle Sam.
Ultimately, the courts decided that their zany arguments weren’t good enough, which is why we decided to cover them in today’s article. Hopefully, you’ll find these as funny and as outrageous as we have!
A Novel Idea Doesn’t Fly
One successful author tried to avoid paying more taxes than she should by coming up with a baffling explanation. She needed to pay self-employment taxes, which are generally reportable on Schedule C, but she reported some earnings under Schedule E of her 1040, claiming them as investment income- namely a big chunk of money she got from contracts with publishers and reporters that used her name and likeness.
If you’re confused, you’re not alone! The Tax Court didn’t accept this argument since her brand was part of her business as an author. Furthermore, when she entered into the contract with the publishing company, they didn’t allocate payments for her name and likeness.
And, after all, all authors try to build their brands and promote their work. Naturally, she ended up owing self-employment taxes on all her income.