The Service has always used test cases on new business types to enforce existing tax law. Content Creators and other Media Influencers are learning this the hard way.
People who earn their living by posting on TikTok, YouTube, and Instagram are discovering that the antique laws of the IRS are both unforgiving and unyielding when it comes to the proper preparation of their tax returns. And the income taxes they’re paying as a result are egregious.
The test areas of concern are as follows…
1 – The only way that clothing is deductible is if it’s a work uniform or a costume that could be worn in a play. The overall rule is that if you look funny wearing it as you walk down the street, then it might be deductible.
The expensive suits or other work related items you wear and the clothing that Tiktokers use when posting is probably not deductible.
2 – Beauty treatments and makeup are also not deductible because they’re considered personal expenses.
The only way that they can be is if they’re an ordinary and necessary expense for a theatrical production or a photo shoot. Also, they must be unsuitable for everyday use.
3 – Breast enlargements and other cosmetic surgeries are generally not tax deductible. There are two exceptions to this rule.
If the surgery is deemed medically necessary to correct a deformity then it may be deductible. Also if the Breast Enlargement is considered ordinary and necessary to the production of income and is so large that it’s considered extreme for daily use, then the enlargement may be deductible.
In a landmark case, see Hess V. Commissioner (1994), an exotic dancer was allowed to deduct her breast augmentation. Under the IRS Code, the cost of the surgery must be capitalized and depreciated as five year property.
4 – Expenses for household pets aren’t deductible. However, you may be able to deduct expenses for a dog if it qualifies as a service animal for medical needs, is used for business purposes such as guard dogs, or if you’re fostering a pet for a qualified charity.
The next time you’re jealous of an influencer making money by doing almost nothing, consider the income taxes they’re paying which generally range from 30% – 50%. When you realize that the IRS is also cracking down on these individuals, their lives may lose all of their appeal.
Let me leave you with this.
In a political setback for President Trump, the Supreme Court struck down most of the tariffs that were put into place over the last 13 months, saying that they are unconstitutional. Specifically, the court decided in a 6-3 vote that the President exceeded his authority by using the International Emergency Economic Powers Act of 1977 to implement those tariffs.
In anticipation of the ruling, the administration has made it clear that they’ve been been doing their homework for months and are prepared to quickly implement new tariffs under other laws that allow the President to impose them.
Legal experts agree that there are a number of additional statutes the President can use to impose tariffs on certain products or trading partners without congressional backing. Those statutes include…
1 – Section 122 of the Trade Act of 1974 allows the President to implement a tariff up to 15% for a maximum of 150 days at will. Congressional approval is only needed to continue after that period.
2 – Section 232 of the Trade Expansion Act of 1962 lets the President implement tariffs on national security grounds. These target specific sectors such as aluminum, steel, or lumber and need the support of a Commerce Department investigation. The administration has successfully used these before.
3 – Section 301 of the Trade Act of 1974 lets the President implement tariffs on countries that are violating international trade agreements that harm US businesses. In this instance, there’s no limit on the tariff amount or duration, but they must be justified and supported by lengthy investigations
Do yourselves a favor and don’t think that this is over by a long shot. The administration just passed a sweeping bill cutting taxes and they need a way to pay for those cuts.
If I were you I wouldn’t do anything to adjust my prices. If anything, you need to watch the news and see what will happen next.
What was removed today will probably be reinstituted tomorrow. I’ll continue to write about this as the story progresses.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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