In a 2018 study, 45 percent of pet owners wanted to declare their beloved fur babies as dependents on their tax returns. Unfortunately, even though pet parenting might feel like a full-time job, you cannot claim your dogs, cats, bunnies, birds, and other animals as dependents unless you qualify for one of the following tax deductions.
Service & Emotional Support Animal Tax Deduction
A pet's medical expenses are not deductible. However, your medical expenses are deductible if they exceed 7.5 percent of your adjusted gross income (AGI). If your pet is vital to your survival, physical or emotional, you can claim the animal on your taxes. For example, those who are disabled and rely on a service animal for assistance can claim a dog as a qualified medical expense. Costs associated with these highly trained animals include purchase costs, professional training, and vet care. You can only write off expenses for animals that perform specific services, such as:
Guiding a blind person
Alerting a deaf person
Assisting with mobility or ambulation
Protecting an epileptic person during a seizure
Although every pet provides love and affection, not all qualify as emotional support pets. If suffering from any of the following mental problems, you may make a case for a medical expense deduction on the pet.
Post-Traumatic Stress Disorder (PTSD)
To claim your pet as a service or support animal, you must sufficiently prove that the animal helps treat a diagnosed mental or physical need. Be prepared to provide a note from a licensed health professional, such as a doctor, psychologist, or therapist.
Tax Deductions for Working Animals
As a business owner, you may qualify to receive a tax deduction for pets that provide a service for your company. In this case, your business must prove the cost of keeping a pet remains a necessary part of operations. For example, you depend on a cat to defend your property from pests or have dogs protect livestock from prey. IRS Publication 535 provides a list of business expense deductions related to pets.
Tax Deductions for Performance Animals
The IRS considers animals that are part of a business venture and the cost of caring for them as business expenses if their performance earns you income. Examples include horses in rodeos, dogs appearing in print advertisements, or cats starring on a monetized YouTube channel.
Tax-Deductible Moving Expenses for Pets
If you move to a new home and the money spent transferring your pet meets certain conditions established by the IRS, you can write it off. For example, your new primary job location must be at least 50 miles farther from the old home.
Tax-Deductible Donations to Pet Charities
If you foster animals, you might be able to get a break on your income tax return. Every expense for caring for foster animals could be deducted as a charitable donation, so long as the animals are from a qualified organization. Most nonprofits will pay for the food and veterinary care for the animals you foster, but any necessity you purchase out-of-pocket is a tax-deductible pet expense.
Standard Deduction or Itemized Deductions
Rather than taking a standard deduction, you must tally up all those vet bills, food supplies, and pet insurance to itemize your deductions. In case of an IRS audit, keep all receipts related to pet expenses and speak with a qualified accountant for the best advice.
Here to Help
If you have questions about whether your pet qualifies for these tax deductions, we are here to help. We build value added relationships with each client to provide solid solutions, and our approach offers clients direct access to the firm's decision-makers. Contact us to let us know how we can best support you.