Federal Tax Myths: Your Dog Can Be Claimed as a Dependent?

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The tax code is over 60,000 pages long. No wonder there’s a little confusion as to what’s taxable, who is most likely to get audited, and what you can claim as a deduction.

A Baltimore Sun story busts some commonly-believed, totally untrue myths regarding taxes. The big one being that our tax system is voluntary and/or unconstitutional—and hey, if either of those was the case, you wouldn’t have to pay taxes at all:

Pick an amendment – from the right to free speech to protections against self-incrimination and involuntary servitude – and tax protesters have used it to justify not paying taxes. In particular, the 97-year-old 16th Amendment, which authorized Congress to enact our current tax system, has long been under attack.

“There are some people in jail who argued that the 16th amendment was never ratified,” says Eddy Quijano, an instructor at California Polytechnic State University and a former IRS lawyer.

Actor Wesley Snipes, who argued he wasn’t legally required to pay taxes, may soon join other so-called tax deniers in jail. He was convicted of failing to file tax returns in 2008, and remains free while appealing his three-year prison sentence.

Similarly, some argue that because we have a “voluntary” system, taxes are optional. But voluntary only “means the government is trusting you to self-report how much tax you owe,” instead of the government telling you what you owe, says George Willis, an associate clinical professor at Chapman University School of Law.

Ah. So not voluntary at all. Or you volunteer an amount, and you better be right on the money, literally. Because if it’s not correct, you can be fined big-time or perhaps go to jail.

Here’s an interesting tidbit for our get-by-on-the-cheap times: Bartering, a big trend lately, is supposed to be viewed as taxable income on both sides of the swap. Interesting. Also, confusing. Seems unfair because you’re not gaining income outright. Presumably, the “income” you’re supposed to report would be the depreciated value of whatever the item is that comes into your possession in the swap. How do you come up with that value? And unless you put the swap specifics into writing—or if there’s an e-trail via a barter site like Swaptree—how could any barter transaction be traced and quantified?

No one knows exactly what behavior is likely to trigger an audit, but the Sun story says that deducting expenses for a home office or filing for an extension—practices that some people believe will lead to audits—do not play a role in whether you’re audited or not. Extensions are routine, and more and more, home offices are common.

As for pets?

There are exceptions, but dependents usually are children or other relatives who get more than half their financial support from you and live with you for more than half the year.

You must provide a social security number for each dependent you claim. So sorry, even if you consider your pet a full-fledged member of the family, the government does not. You cannot claim Mr. Whiskers or Spike as a dependent.

Got Tax Questions? There’s a 29% Chance You WON’T Get Answers from the IRS