Table of Contents
Table of Contents
Most of us love our dogs like children, but the law doesn't recognize them as such, and we can't claim them as dependents on our taxes.
While you can't claim your dog, you can deduct a few pet-related expenses on this year's return. So let's take a look at where you can save.
In 2015, Michigan Representative Thaddeus McCotter introduced a bill called the HAPPY Act, allowing deductions of up to $3,500 a year for pet expenses.
This new bill has been endorsed by:
- The Humane Society,
- The Animal Law Coalition,
- The American Veterinary Medical Association,
- The Pet Industry Joint Advisory Council,
- The American Society for the Prevention of Cruelty to Animals.
Despite that, it couldn't really get any traction. While we're still waiting for legislation, some pet owners can still find some deductions.
A lucky few can make a dog or other animal-related claims on the U.S. tax return.
If you aren't sure if your dog or pet-related expenses are deductible or if this is your first business year filing, get professional tax help.
Tax laws concerning the sharing economy and services over the Internet are still evolving as well.
Someone qualified and educated on the latest regulations might even help you claim other business or dog-related deductions that we haven't even thought of yet.
17 Tax Deductions for Dog Owners
If you're visually impaired or hearing disabled, your service dog is a legitimate expense. That means, under IRS Publication 502, you can deduct your dog's medical and dental expenses, some of which may include:
- The animal's purchase price
- Their training costs
- Their maintenance costs like food, grooming, and veterinary care
Trained Therapy Animals
There are other physical disabilities and mental conditions recognized by the government that benefits from a trained companion.
If you have a certified therapy dog breed, maintenance costs can also count as a medical expense.
You need an official diagnosis; pets without certification are unlikely to pass with the IRS.
As with all other medical expenses, you can only claim those over 10 percent of your gross income or 7.5 percent for seniors over 65.
Raising Guide and Therapy Dogs
You might not need a guide or therapy dog yourself.
Still, if you are raising and/or training any certified assistance dogs, your expenses are a charitable deduction.
You'll need to keep your receipts and an itemized list of all expenses, the same as with all deductions, so make sure your accounting is in check.
Guard Dogs and Other Animals
This one only applies to businesses where your animal is a normal and necessary part of the workplace, not just a welcome addition.
You'll need accurate records of your dog's hours on the job.
If you can actively document their protection skills, that's even better.
Dogs need to be the right breed or look suitable for their task.
According to the IRS, a poodle's bark doesn't make it a guard dog, but there have been cases where cats have been employed for their mice-catching skills.
The value of your animal must also depreciate with age (like a piece of equipment).
Guard dog breeds aren't the only ones on the job, as any farmer can tell you.
Many farm dog breeds can also get on the list.
Something like a good sheepdog can be vital in raising and protecting livestock.
Outdoor animals might keep pests and wildlife away from your crop too.
The key is proving that these are working animals, not regular pets.
When You and Your Pet Move to a New Home
There aren't many deductions that apply to pets, but one exception is when you're moving.
Your animals need special pet transportation, such as travel crates or other equipment.
That can fall under IRS Publication 521 – Moving Expenses.
The other option is to file an above-the-line deduction using the long Form 1040 and Form 3903, which can include all your moving costs.
Professional Dog Breeders
Sometimes, dogs are your business because you are a professional breeder.
Even breeding as a hobby produces taxable income.
Still, the total of any itemized deductions on your Schedule A form has to be more than 2 percent of your gross breeding income.
You have to make a profit for expenses to be deductible, which for many hobbyists isn't the case.
Since you're running a dog breeding business, you must follow local zoning rules.
You may need to be ready for an IRS inspection to show you're following any other rules that apply.
But if you're doing it all legitimately, don't worry about it.
Dog Show Prize Winners or Animal Movie Stars
We all think our pets are cute enough to be stars, but some actually are.
The dog modeling/acting business is becoming more popular.
Dogs might be in TV commercials, participate in TV shows, and even become pet movie stars, thus generating regular income.
If they are big prize winners, and that's a significant part of your yearly income, that's a legitimate dog-related business.
Not only does this mean you can list things on your Schedule C form, but you can claim “ordinary and necessary” expenses and “other” business expenses.
Dogs that are winners of show dog competitions like Westminster that go on to advertise something and generate income are also contenders for tax deductions.
If this is the case for you and your canine companion, it's best to work with a CPA.
If not, a CPA, a lawyer, or other tax professional to ensure you take all the deductions possible.
Dog trainers are in a great position to get some pet-related tax deductions this year, especially for those running their own dog training businesses.
On top of regular business expenses, continuing your own education can be deducted as an “other expense” for your venture if you're a professional certified dog trainer.
Your dog might also be an “ordinary and necessary” part of your workplace as a demonstration model, which allows you to further tax relief with the IRS.
Dog Sitters, In-home Trainers, Volunteer Travel Expenses
Some business models mean you must travel to your clients and their dogs, such as mobile dog grooming or pet sitting services.
If that's the case, keep daily travel records or claim a flat rate per mile.
When your vehicle is your company car, for example, modified for transporting dogs, you can also deduct some of the actual ownership and driving costs.
If you're volunteering with dogs, your travel expenses might be a charitable donation too.
Jobs like this are becoming more popular as part of the new sharing economy.
There are even pet apps to connect clients with service providers and facilitate transactions.
Since nothing is deducted from regular paychecks, some of your profits must go to the government, so make sure you put at least 30 percent aside to pay those taxes.
Deducting Sales Tax Instead of Income Tax
Is your dog a business expense?
Do you deduct state and local sales tax instead of state and local income tax on your Schedule A form?
If that's the case, you could deduct the sales tax paid on all dog food you buy for your pet separately.
Some other similar expenses apply here too.
Liability Insurance for Dog Businesses
Every business can claim insurance as an expense on their taxes, and the same applies to pet business insurance costs when filing your Schedule C.
However, dog trainers and other pet-related businesses might need coverage for additional liability in case of injury or dog bites.
That means extra deductions too.
Modifications to Your Home or Office
Do you need office space or other business-related facilities in your home?
If part of your house is only used for business, and it's your principal workplace, you can claim your operating costs and a pro-rate share of household expenses.
If you communicate with your clients from home as part of your business, you can also claim some tax deductions as a “Home Office.”
Special building modifications and equipment can be written off too.
Just remember that they depreciate over time.
Advertising for Your Dog Business
Running a pet-related business is no different than any other business in many ways, and there's a lot of spending.
Advertising and marketing are essential expenses for many small businesses, including those in the pet service industry.
All business promotion-related expenses and deductions include ads, special business events, and sponsorships that list your business.
Fostering for an IRS Qualified Adoption Organization
Do you volunteer for an IRS-qualified 501(c)(3) adoption organization?
If you do, your expenses can be deducted from any other donations in the charity section of Schedule A.
Make sure to get documentation that proves you are a recognized part of the organization and that fostering a dog falls under those guidelines.
Running Your Own Shelter
People who launched their dog rescue businesses last year or run their own animal shelters should not be left behind, either.
You can deduct your animal shelter expenses.
But it might be tricky to prove which expenses are personal and which are for foster animals when owners have both in their homes.
That can be even harder if you aren't volunteering for a larger organization.
Fortunately, it has been done.
As with all volunteer expenses, keep your related receipts.
Trust Fund for the Animal
You may be able to claim a deduction while a deceased loved one's estate is settled if there's a trust for the animal.
This is a tricky one, but it's worth looking into anyway. Ask your CPA about it.
Pets are a growing concern in estate planning.
Sometimes, it can take a while for everything to be settled.
In the meantime, pet expenses may be deductible.