Oddball Tax Credits and Deductions You Might Qualify For

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Calling all aspiring filmmakers, business owners with big dreams of a Caribbean cruise and people with, er, a deadbeat friend: We might have a way for you to save some loot. Here are ten tax credits and deductions that, though unconventional, might save you a pile of money at tax time.

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The "Bad Friend" Deduction

If you've ever loaned money to someone who didn't honor the debt, you can deduct that amount under what's called a "bad debt deduction," assuming you can prove there was a loan agreement in place and that you tried unsuccessfully to collect on the loan. This deduction also applies if your business lent money to clients or suppliers or allowed sales on credit that your customers then didn't repay.

Related: Internal Revenue Service Explanation of Bad Debt Deduction

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The "It's Not a Car" Tax Credit

If you own a two- or three-wheeled plug-in electric vehicle, you can get a tax credit worth 10 percent of the cost of the vehicle, not to exceed $2,500, notes Scott D. Kadrlik, a Minnesota accountant. The law is retroactive to the start of 2012 and is in place until the end of 2013. The vehicle must weigh less than 14,000 pounds, be made for use on public streets and travel at least 45 miles per hour. It must have been purchased for personal use.

Related: Fiscal Cliff Deal Includes Tax Credit Extension for 2- and 3-Wheel Vehicles

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The "Cruising Convention" Deduction

If you long to conduct business meetings from the deck of a cruise ship, the IRS has your back. The agency allows you to deduct up to $2,000 a year in business expenses if attending a business-related event on a cruise. The agency requires you to document the hours spent on business activity and provide the event agenda and a statement signed by the convention's sponsoring group. All ports on the cruise must be in the United States or a U.S. possession like the U.S. Virgin Islands.

Related: IRS Publication 463 on Travel, Entertainment, Gift and Car Expenses

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The "Banana Republic" Deduction

If you're looking to deduct an exotic business getaway that isn't a cruise and want to travel outside of the U.S., you're in luck. The IRS allows individuals to deduct travel expenses for meetings in the North American area, which includes popular tropical destinations such as Aruba, the Bahamas, Bermuda, Costa Rica, the Dominican Republic and Jamaica. You must show that your attendance at the convention benefits your trade or business and provide documentation such as a convention agenda.

Related: IRS Publication 463 on Travel, Entertainment, Gift and Car Expenses

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The "Algae" Tax Credit

While most of us find algae a yucky annoyance, for alternative fuel producers, it's a money-saver. If you use algae to make fuel, you can qualify for a biofuel tax credit: For every gallon of algae fuel produced in 2012-'13, producers can get a $1.01 nonrefundable income tax credit, say officials at the Biotechnology Industry Organization, the largest biotechnology trade association headquartered in Washington, D.C.

Related: Extension of Second-Generation Biofuel Tax Credits Supports Innovation and Economic Growth, BIO Says

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The "Wholesome Food Donor" Deduction

Companies that donate food to charity can get a larger charitable deduction than typically allowed, if the food they donate is "apparently wholesome food." The law defines "wholesome food" as food that meets a set of defined quality and labeling standards, "even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus or other conditions."

Related: U.S. Code: Charitable, Etc., Contributions and Gifts

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The "Ottoman Empire Redress" Tax Exemption

In 2005, California lawmakers passed a provision that allows those receiving settlement payments for being persecuted by the Ottoman Empire between 1915-'23 to exclude such payments from their income. The payments are from a $20 million life insurance benefit settlement between Armenian survivors of persecution, their families, Armenian community groups and the New York Life Insurance Company.

Related: CBS News: $20M Settlement For Armenians

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The "I'm Glad I'm a Foreigner Who Gambles" Tax Break

Some foreign nationals are exempt from paying taxes on gambling winnings thanks to tax treaties between the U.S. and those countries. If you hail from Austria, Bulgaria, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, the Netherlands, the Russian Federation, the Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, the Ukraine and the United Kingdom, party on (tax-free). All other nonresident aliens must pay a 30 percent tax on gambling income with the exception of these specific games: blackjack, baccarat, craps, roulette or the Big 6 wheel.

Related: IRS Publication 515 - Withholding of Tax on Nonresident Aliens and Foreign Entities

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