Offbeat deductions you might've missed

There's almost nothing that isn't tax-deductible, under the right circumstances.

When my kids were younger, I had T-shirts made for them with "Ask My Dad" on the front and "How to Pay Zero Taxes" on the back. These wouldn't have been allowable as clothing deductions, but they were fully deductible as advertising.

Rules on write-offs

To win the write-off game, you have to follow the rules.

Rule No. 1: Unless your brother-in-law is a tax expert, confirm his recommendations with someone who knows what he or she is talking about, such as a tax accountant or an enrolled agent.

If you work from home, you have a lot of opportunities to write off things within the rules. I work out of a home office, and for the past 20 years I've been videotaping wills for my clients. I show those wills to the beneficiaries on a big-screen TV that I keep in my office. I use the TV exclusively for business, so the cost of it was 100% deductible. See Schnepper's tax-deductible TV

On the flip side, I've had clients ask me to help them write off 100% of their car expenses just because they'd stenciled the names of their businesses on the doors. Sorry -- won't work. All you get is the cost of the stenciling. Your other auto deductions are dependent on how many business miles you drive compared with your total miles.

• Tell us: Had any offbeat deductions?

Rule No. 2: Always keep substantiation for your deductions. If you're audited, no substantiation means no deduction. Bury the Internal Revenue Service with relevant paper! Chart: Are your deductions audit-proof?

As I said, structured correctly, just about anything can be deducted. A stripper who wrote off breast enhancement?

Here are some examples:

1. Your investments got hit by the Madoff scam? Consider writing off your full loss as a theft deduction.

2. Laid off in the recession? Any out-of-pocket expenses in looking for a job, such as the cost of résumés, travel and even retraining, are allowable.

3. Holiday gifts (up to $25 per person) can be deducted if given to people with whom you have business relationships.

4. Dues and publications are allowable deductions if related to your business or job.

5. Meals can be deducted if you dined with a business associate, client or potential client and you discussed business during the meal.

6. Entertainment, such as football, baseball or theater tickets, will cut your tax bill if you take a business associate, client or potential client and you discuss business before, during or after the entertainment.

7. Clothes can be deducted as advertising if you embroider your business name on them.

8. Go to a professional seminar when you go on "vacation," and the travel becomes a potential deduction.

9. Give your old clothes, furniture and the like to a charity and take a deduction for their fair value. Make sure you follow the IRS rules on valuing the gift exactly and get a receipt!

10. Guard dogs to protect your business property are legitimate deductions, as are their meals and veterinary care -- even if you enjoy petting them.

To write off items as business deductions, your expenses must be:

1. "Reasonable and customary," as defined by the courts and the IRS. The "Dirty Dozen" tax scams

2. Paid for or incurred during the tax year.

3. Connected with the conduct of a trade or business.

The meaning of "reasonable and customary" depends on your specific trade or industry. Taking a swing at the IRS

There may be 20 million to 30 million Americans who work from home either full or part time, with the number growing as access to high-speed wireless Internet has spread.

To qualify for a home-office deduction, you must use an area of your home regularly and exclusively for business purposes, and you must meet any of the following three conditions:

1. You use the area exclusively to store inventory or product samples for your business.

2. You use the space as your principal place of business, and the business generates revenue.

3. You use the space to meet with clients, patients or customers.

To claim the home-office deduction, you must file Form 8829 (.pdf file) and base your deductions on the ratio of the square footage used for business versus the total square footage in your house.

So, if you use a 10- by 20-foot room for business and have a 2,000-square-foot house, you're allowed to claim 10% of your qualifying expenses as home-office deductions.

I don't care how weird your deduction is. If you can relate it to your business or if it is specifically allowed, as long as you have substantiation, you should be able to win.

The list of things that may qualify as tax deductions can fill a book. In fact, my book "How to Pay Zero Taxes" details those deductions and explains how to qualify for them.

MSN Money's Tax Center is a good source of tax information and knowledge. One of our major objectives is to educate you so that you don't have to pay a single penny more in tax than the law requires.

Produced by Peggy Collins / Graphics by Hakan Isik

Published March 13, 2009