Pet & Animal Tax Write-Offs
“Animals are reliable, many full of love, true in their affections, predictable in their actions, grateful and loyal. Difficult standards for people to live up to.” ― Alfred A. Montapert
Like many people, I absolutely love animals. If money, practical limitations, and not looking like a crazy person were not factors – I don’t think there would be any limit to the number of pets I would have.
While having a pet can be good for your soul, the IRS provides few tax advantages for pet owners. Most of the costs associated with pets are considered purely personal expenses with no tax benefits. But do not despair completely! There are a select few tax breaks related to pets that are available.
Volunteer Activity and Animal Foster Expenses
If you volunteer for a qualified non-profit organization, then you can deduct a couple of things. Any miles driven while volunteering are tax deductible as a charitable donation. The rate for 2015 is only 14 cents per mile, but for some volunteers that can really add up!
And if you foster animals, any of the expenses associated with fostering are also deductible as charitable donations. The miles driven in caring for them, food, medical expenses, and other supplies – all of these are tax deductible.
Note: both of these are part of Schedule A/itemized deductions so what is discussed will only apply if you are itemizing deduction. The way this works is that you take the greater of the standard deduction or your itemized deductions. Itemized deductions include: medical expenses, state income tax and sales taxes, real estate taxes, personal property taxes, mortgage interest, charitable donations, and other miscellaneous deductions.
In 2015 the standard deduction is $6,300 for single people and $12,600 for married couples. If you do not have enough deductions to itemize, you will not get any tax benefit from your volunteer expenses.
Certain Dogs & Cats as Business Expenses
Deducting an animal for business purposes can be pretty tough. But there are a few exceptions. For instance, if you have a dog that guards inventory for your business, you can deduct the business percentage of expenses associated with the dog’s upkeep (and actually depreciate the initial cost of the dog over time). The breed of the dog plays a factor here. A German Shepherd, Boxer, or Rottweiler is going to be a lot easier to justify than your Shih Tzu or Yorkie.
The same principle could be applied to a ratting cat or dog whose primary purpose is pest control. Taxpayers who own storage facilities, junkyards, and other businesses with pest problems have successfully taken this deduction.
One note of caution: if you have a pet that you bring with you to work who acts as the office “mascot” in a way – it may be tempting to deduct the costs associated with it. It seems like advertising and customer goodwill after all. Don’t try this. With few exceptions, these expenses would not meet the sniff test with the IRS. Unless the pet is integral to and active in your marketing efforts, keep their expenses off your business return.
Guide Dogs & Therapy Animals
While the cost of pet upkeep is a non-deductible expense for most of us, there are instances where these expenses qualify as medical expenses. However, medical expenses in general are difficult to claim for a lot of people. First, they are included as itemized deductions (see note in the volunteer section). Second, medical expenses are subject to a threshold of 10% of your adjusted gross income. For easy math, if you make $100,000 for the year, the first $10,000 of medical expenses are disallowed!
That being said, some people do claim medical expenses and the costs of a guide dogs and therapy animals are deductible as part of those costs. This includes acquiring the animal, training it, veterinary expenses, food, grooming, and necessary supplies.
There would be little question as to the medical necessity of guide dogs. For therapy animals it can be a little trickier. They need to be certified and trained therapy animals that are being used to treat a diagnosed condition.
Oftentimes job related moving expenses are deductible on your tax return. If your move already qualifies and you have to ship your pet separately, you can deduct those shipping costs.
This one is nice because it doesn’t have the limitation of being an itemized deduction like most of the other things mentioned in this article. Moving costs are completely separate and are deductible regardless of whether you itemize or not.
Offsetting Hobby Income
If your dog/cat participates in shows or expos, there is a chance that you might walk away with some prize money – which the IRS would consider taxable income. Any expenses you have associated with that income can be deducted – but with a big catch. Those expenses are itemized deductions subject to a threshold of 2% of your adjusted gross income.
This won’t affect most taxpayers since prizes are rare and are likely small. Still, if you somehow start making money from agility competitions you’ll want to deduct the expenses associated with them. If it became a major source of income, it may be appropriate to reclassify it is an actual business.
This is pretty self-explanatory, but if your shelter is a non-profit with the IRS any cash donations you make are tax deductible. Especially at kill shelters where there are urgent situations where donations are needed to save a specific animal, you probably aren’t thinking about the tax break. But if the donations are made to the charity itself, do not forget to take the write-off on your income tax return.
There is no doubt that caring for your pets is a labor of love – and is one for which the IRS gives very little tax benefit. But hopefully the above tips will provide at least some folks a tax break that will help pay for Fido’s next chew toy.
Any accounting, business, or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.