Like most pet owners, it is likely that you consider your pet as an integral part of your family; in fact, your pet might be just as important to you as a child. Unfortunately, the IRS does not think along the same lines. In most cases, pet-related costs are considered personal expenses, and you cannot claim pets as dependents. The new tax law makes it harder to differentiate between your kids and your pets at tax-filing time by suspending your and your children’s exemption amount from this year on.
But there are some tax deductions that you can claim for your dog or other pet and associated expenses. The following are some tax breaks provided by the IRS that you might be able to take advantage of if you have a pet.
Tax-Deductible Expenses for Service Animals
While you cannot claim pet medical costs for your pet, the costs associated with service animals – such as guide dogs for hearing or visual impairments, and certified service dogs for certain other health conditions, such as seizure dogs for those with epilepsy – may be deductible.
- The costs involved in buying and training the animal, food, and veterinary expenses, as well as any grooming costs necessary to keep your animal healthy enough to be of assistance, can be deducted as a medical expense.
- You will need proof in the form of a doctor’s prescription indicating that the pet is a medical necessity before you can claim the deduction.
- You must possess documentation that supports the fact that your pet is certified or trained as treatment for the specific illness.
- In order to claim these deductions, you do not personally have to be the beneficiary of your service animal’s skills. For example, if you are nurturing dogs for charitable agencies, costs related to looking after them can also be claimed as a charitable donation.
- Therapy or Emotional Support Animals (ESAs) are not considered service animals under the definition of the ADA, making their expenses personal and non-deductible. Expenses associated with moving or fostering your ESA can still be deducted, though – we’ll cover that below.
Only the portion of your medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI) is considered part of your itemized deduction. Also, the total of all itemized deductions must be greater than the standard deduction, which is much higher due to tax reform.
Deductions for Fostering Pets Waiting on Adoption
Fostering a pet for a qualified nonprofit organization doesn’t come cheap. So being able to claim any expenses incurred as a result will provide you some financial relief on an annual basis. Expenses that can be listed under Schedule A as charitable deductions are:
- Costs that are not reimbursed, such as money spent on veterinary care, food, and supplies.
- Expenses related to your travel as part of your volunteer work at a shelter or rescue agency. You can deduct 14 cents for every mile that you travel on these trips.
Any charitable donations that you make in cash or kind to such ventures are also tax-deductible if you itemize deductions. Don’t forget to keep a mileage log and receipts for these expenses. Tax reform has increased the allowed deductions for these types of donations to 60% of your AGI.
Tax Deductions for Guard Dogs and Other Business Animals
If you can establish that you have an animal that is providing some type of service for your business and you are self-employed, you will be able to write off expenses related to the animal, such as food, special training, and veterinary care, as business expenses.
- Thus, if your dog guards your workplace, your cat is used to ensure mouse control, or some other animal helps in pest control and the animal lives at your workplace and is not a pet, then you may be able to claim deductions in keeping with the standard deduction norms.
- It is essential that you maintain detailed records of the hours your animal works each day. You will have to demonstrate that the animal is helping your business, thus justifying the cost of maintenance.
- The breed of animal you own will play a significant role in the IRS approving or rejecting your claim. For instance, owning a mastiff or a pit bull lends credibility to the guard dog claim, while a smaller breed such as a Yorkie or Maltese might not be as convincing.
Employee business deductions are no longer allowed under tax reform.
Taxable Income From Pets
When your pet generates income for you, you may be able to deduct some or all of your expenses.
- For example, pets that are used in advertisements or movies, show animals, breeding your pets and selling their offspring, or if your pet’s social media accounts fetch you ad revenue.
- Under the Tax Cuts and Jobs Act of 2017, you may no longer deduct miscellaneous expenses when itemizing, so when your income is considered a hobby and not a business, you can’t deduct your expenses. However, you do still have to include your hobby income on your tax return.
- Turning your pastime into a business is your best option when it comes to taxes.
Be sure to keep track of all pet expenses and retain receipts diligently so that you can maximize your claims. Any pet-related expenses that are not covered under the above criteria don’t usually qualify as deductions.