3 Ways to Dodge Taxes Legally & Crazy Loopholes People Used!

4. Drug dealers can also get tax deductions

That’s right! Just because someone’s a drug dealer, doesn’t mean they can’t avoid paying taxes legally. After being caught and charged with drug trafficking, Jeffrey Edmondson was audited by the IRS for $17,000 in back taxes, for not reporting his income from drug dealing.

In return, Edmondson filed a tax return, declaring his taxable net income and claiming several business deductions, without specifying was his occupation was. The IRS turned down his claims but that did not stop the persistent drug dealer. He decided to take his case to Tax Court. He even went as far as claiming that he set up a home business and was entitled to home-office deductions. Surprisingly, the judge agreed and Edmondson was allowed to write off his expenses, including more than 19,000 miles in business mileage on his car and 100 pounds of marijuana.

5. An NBA star deducted his fines

You don’t know if something is possible until you try, right? That’s exactly what former NBA star Lamar Odom thought in 2010 when he sued the IRS for claiming that he owed $87,000 in taxes and interest. Odom had previously written off $12,000 in sports fines and $178,000 for fitness expenses. The IRS claimed these expenses were not deductible.

According to Odom “these (NBA) fines are commonly assessed on professional athletes and are work-related. Therefore, the fines incurred are ordinary and necessary employee business expense.” The final verdict came in 2012, when the IRS agreed to $9,000 in owed taxes and interest.

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