Pet-Related Tax Benefits
Most pet owners will tell you that their pet is a member of their family, but when it comes time to do your taxes, the IRS disagrees. That means you get no tax exemption for all the love and care that you provide for your pet.
But, there are situations where you can deduct some of your pet-related expenses if you fall within certain situations. The terms are pretty specific, but it’s worth looking into when you visit your accountant or tax preparer in the coming months.
Charitable Donations to Rescue Shelters
Although the cost of adopting a dog or cat from a shelter is not deductible, any donations made in excess of regular adoption fees are deductible. Only those donations made where no goods or services are received in exchange (i.e., your new pet) can be deducted. When you make donations to your favorite animal 501c animal charity (mine are BARCS and Baltimore Bully Crew), be sure to ask for a letter of receipt that states that no goods or services were received.
Donations of goods or services to an approved charity are tax deductible, and when you donate ask for a donation receipt. The value of your donation will need to exceed $250.
If you raise dogs for a charitable organization, such as Guide Dogs for the Blind, the costs associated with providing for them qualify for a charitable deduction.
To deduct a charitable contribution, file a Form 1040 and itemize deductions on Schedule A.
Expenses you incur in caring for foster animals from a qualified nonprofit organization (recognized by the IRS with the 501(c)(3) designation) are deductible (by using Form 1040 on Schedule A as charitable donations. These must be unreimbursed expenses in order to get the deduction, and they should be defined as going toward caring for the fostered animals, such as food, supplies, and vet bills. Most organizations already provide medical care and food for these animals, but any out-of-pocket expenses necessary for their care that are not provided or reimbursed are deductible.
Although the IRS takes a hard stance on deducting the cost of animals as a business expense, they will allow it if a dog is used to guard and protect your work premise and inventory. Standard business deduction rules still apply, and you must show that the keeping of an animal on your work location is ordinary and necessary in your line of business. Size and breed would definitely matter, as a breed that is typically used for such jobs carry weight, where a Yorkie or Chihuahua would not. Guard dog-related expenses such as food, training, and veterinary bills would be allowable if you keep well-documented records of the dog’s work-related purpose and his hours “on duty”.
If you are moving due to a work-related situation (new job or job reassignment/relocation), you can deduct costs associated with transferring your pet to your new home.
There are some requirements for this benefit:
Your move must be closely related to the start of your work
You must pass the distance test – Your new job location must be at least 50 miles farther from your old home than your old job location was. If you are starting a new job and did not have a former workplace, your new job location must be at least 50 miles away from your old home. According to the IRS the distance is determined by using the shortest of the most commonly traveled routes.
You must pass the time test – You must work for an employer full-time in the vicinity of your new job location for at least 39 weeks during the year following your move. Keep in mind that the 39 worked weeks do not have to be consecutive or even with the same employer, which means you are free to change jobs after you move. If your employer transfers you or fires you after you move, the IRS will overlook the 39-week requirement. There are also some exceptions for disability, death, involuntary separation, and other unique situations.
Guide Dogs and Service Animals
Medical expenses are deductible if you itemize, and according to IRS Publication 502, you can include the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually or hearing-impaired person or a person with other disabilities. In general, this includes food, grooming, supplies, and veterinary care that is necessary to ensure the animal is healthy enough to perform assistance duties.
You will need a prescription or documentation from your doctor that shows your medical necessity prior to obtaining any pet that you claim in order to meet the requirements of the IRS. Keep any documentation that shows that the animal was specially trained and certified because the IRS will only approve the deduction if the animal is trained and certified as treatment for a diagnosed illness or condition.
Also, you don’t actually have to use the dog yourself to get a deduction for this category. As mentioned above under Charitable Donations, if you raise dogs for a charitable organization, such as Guide Dogs for the Blind, the costs associated with providing for them qualify as a charitable deduction.
Hobby Expenses (Show Dogs)
Pets used in hobbies, such as show dogs, may be deductible. If your dog wins prize money, then the expenses incurred to train, show, etc., are deducible up to the amount of the winnings.
Such expenses must be itemized with other miscellaneous deductions on Schedule A, and that total must exceed 2% of adjusted gross income to be deductible.
Law Enforcement Dog Handler
Some of the cost that goes along with maintaining a police dog may also qualify for a tax deduction if you’re not reimbursed for these expenses through your job. If the dog lives in your home when not on-duty and you’re responsible for buying its food or purchasing a kennel, you can generally claim them as a job-related expense.
Please be sure to discuss these potential deductions with your tax professional to confirm that they are legitimate for your personal financial situation and for your tax filing.