“But, sir,” I plead. “I am the only form of support for these animals! I feed them, provide shelter, give them training, pay for doggie daycare, make sure they are clothed; why, I even cover their medical expenses!”
Like Scarlet’s father, my CPA stares at me with his piercing blue eyes. “Now, Ms. Stacy, it’s just that the IRS don’t see animals that way. To them, those animals are just plain ol’ property – the same as that tree over yonder.”
“Do you mean to tell me that these creatures mean nothing to those awful tax people? That land and money is the only thing worth fightin’ for? Worth dyin’ for?”
“Why, land and money is the only thing that lasts, Ms. Stacy,” says my CPA. “Now, you go on home and let the menfolk take care of this. Taxes just ain’t fit for a lady as gentle as you to be fussin’ over.”
He shoos me from his office and exiting the building, I fall to my knees and raise my fist into the air, “As God is my witness, I will find a way to deduct my pets! And when it’s all over, they’ll never audit me, nor any of my readers, ever again!”
[camera moves across sweeping sunset, fade to black and…cut!] [note style=”5″ type=”warning” icon=”yes”]Note: I am NOT a CPA, nor am I particularly good with money or taxes. I’m a writer. Be sure that you check with your CPA or accountant (or even a stranger on the street) before trying to take any of these deductions – doing so just makes good business sense. [/note]Okay – of course none of that really happened. My CPA is as committed as I am to lower our already insanely high tax rate. But, since I’m a writer, I took the lead on research… Turns out, there are plenty of ways to write off your pets. (Or at least, decrease the costs associated with them).
[box title=”A proposed income tax deduction must meet 3 tests:” box_color=”#006666″ radius=”13″]- Is it documented?
- Is it business related?
- Is it reasonable?
[heading style=”1″ color=”#006666″ style_color=”#006666″]1. Celebrity Pets[/heading]
Being a celebrity is tough work, and it deserves a tax break – especially if your pet is bringing in an income (Grumpy Cat comes to mind). If you are making money with your pets, then you may be eligible for a deduction.
Let’s say that you dog is a model and earns $50 in modeling fees. You are then able to deduct $50 in feeding expenses to keep that model in perfect working condition.
Just remember that even your dog or cat is making more than you, you need to be sure everything is related (to your business), reasonable (no Rolex watches for your pets), and well-documented.
[heading style=”1″ color=”#006666″ style_color=”#006666″]2. Guard Dogs (with your pets)[/heading]
According to Cliff Ennico (Entrepreneur), the ongoing care of a guard dog is a write off, but not the dog itself. For example, if you paid $2,000 for a trained guard dog, you can total the expenses and write off a portion of them (the percentage of time a dog spends guarding). This only applies to business and inventory. Though it may seem rather obvious, your dog most also be guarding your inventory.
Another interesting tidbit: While you can deduct expenses relating to the dog, you can’t deduct the dog. However, you can depreciate the value of the dog over its expected lifespan as determined by a local breeder. So, there’s that…
[heading style=”1″ color=”#006666″ style_color=”#006666″]3. Moving Expenses (with your pets)[/heading]
If moving your pets requires you to purchase new kennels, safety equipment, transportation fees, or relocation fees – you can probably write them off. If you have a horse, you can figure in the cost of moving that horse. In short, moving with your pet isn’t much different than moving a piano.
[heading style=”1″ color=”#006666″ style_color=”#006666″]4. Charitable donations[/heading]
Well, you can’t write off your dog’s adoption fee. You can, however, write off donations made to your favorite 501c3. When donating goods or services to an approved charity, ask for a receipt – you’ll need it if the value of your donations exceeds $250.
To be extra safe, we always take a picture or two of the items were donating – just to be safe. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.
[heading style=”1″ color=”#006666″ style_color=”#006666″]5. Service/Therapy dog[/heading]
Your emotional support dog probably won’t qualify. But, if you have a seeing eye dog (or hearing-ear dog) for a visually or hearing-impaired person, you should be able to write off the medical expenses of that pet, as well as the cost to buy, train and maintain service animals. Here is an important IRS source for you to read for additional information:
Understanding Itemized Tax Deductions
[heading style=”1″ color=”#006666″ style_color=”#006666″]6. Job Expenses[/heading]
This is tricky, but if you own and operate a business that’s focused on pets, your pet-related expenses are deductible. For example, trainers should be able to deduct mileage and transportation costs. Dog walkers should be able to write off leashes, poop bags, muzzles, or other equipment.
Sadly, my CPA tells me that just because my writing business focuses on animals, I can’t write mine off since I would “technically” be able to do the work without them. However, many of my stories focus on my pets antics and my own ability to do product reviews, so it may be time to explore new accountants…
[heading style=”1″ color=”#006666″ style_color=”#006666″]7. Fostering Expenses[/heading]
Thanks to a couple of recent court cases (namely Van Dusen v. Commissioner in 2011), you can write off expenses for fostering pets as a donation to an approved 501c3 organization. Fostering expenses eligible for deduction are food, medicines, veterinary bills, crates, garbage bags, and the like. Even a portion of your utilities can be considered expenses as long as a specific area of your home is only used for the care of the animals and nothing else. (Be sure the reimbursed expenses are directly related to the care of that animal.)
Read more about this landmark decision where an Oakland-based woman successfully argued that caring for dozens of stray cats should be deductible as a charitable contribution, since she was doing it for a local organization (read the case here)
The basic requirements are that the expenses have to be directly related and solely attributable to the rendition of services to a qualified 501(c)(3) organization. In addition, you need to have documentation to support the expenses, and the organization needs to provide written acknowledgement for expenses over $250. (Source)
Some of the expenses include pet food and supplies, veterinary bills, and even the paper towels you may need to clean up after your foster. If your foster operation is large enough you may be able to claim a portion of your home utilities as well.
You can even deduct 14 cents per mile for trips made solely for the organization.
[heading style=”1″ color=”#006666″ style_color=”#006666″]8. Working Animals[/heading]
This section goes further than just service animals. If you have animals working to complete a job, such as mousing or keeping the property safe for people to enter, then you are able to write off the costs of caring for those animals.
The best example is a the case of a couple who owned a junkyard and was able to write off the cost of cat food they set out to attract wild cats. Why? Because the ferals took care of any snakes or rats on the property, which in turn made the property safe for customers. When the case reached the Tax Court, IRS lawyers conceded that the cost was deductible. (Source)
[heading style=”1″ color=”#006666″ style_color=”#006666″]9. Barking Dogs (What?!)[/heading]
This isn’t a very nice example but there was once a self-employed woman who worked from her condo. A neighbor had a dog who barked and the condo association had a lot of construction being done, so the lady sued both her neighbor (who had the barking dog) and the condo association (who she blamed for the construction noise). She deducted $26,000 in attorney fees as business expenses since they were “disturbing her work”.
The IRS said the legal fees were personal costs but the tax court approved half of the write-off because she used the condo for 50% of her business (and the IRS had failed to prove that the noise didn’t adversely affect her business). You can read the whole case here.
Just for the record, we suggest noise-cancelling headphones and a talk with the neighbor if this ever happens to you…
[heading style=”1″ color=”#006666″ style_color=”#006666″]10. Sports[/heading]
If your pet is an all-star on the show circuit, or you’re heavily involved with sports or other competition (as a trainer, judge, groomer, or presenter), then you’ll probably be able to write off all the costs associated with your pets (as long as those pets are critical to your business). That includes leashes (if you’re a dog-walker), grooming (if you’re on the show circuit), veterinary bills (across the board) and more. But, ALWAYS check with a CPA who understands and appreciates the importance of writing off expenses. This is not an area you want to play around in.
You all remember Rafalca (Ann Romney’s horse). According to Kiplinger,
“Rafalca had a brush with fame when she was ridden in the dressage competition at the London Olympics. But it was her appearance on the Romneys’ 2010 tax return that attracted the most attention. The Romneys reported a $77,731 loss from the entity that owned the horse—a “passive activity” in which they had a partial interest and which they didn’t materially participate in running.
Since the Romneys had other passive income that year, they got to deduct a portion of their Rafalca-related losses—all of $50 worth—though the rest could be carried forward indefinitely to offset future passive income or, if the money-losing horse business is sold, any income.”