Parents, for the most part, can enjoy claiming care-related expenses as tax deductions. At the end of the year, I’m grateful to be able to deduct daycare expenses, my daughter’s health insurance, and medical bills all from my income, and I can also claim the child tax credit. For pet-parents, though, it can be challenging or impossible to claim care expenses as tax deductions. If you’re interested in deducting pet care expenses from your taxes, here are some points to consider.
You can deduct pet expenses if you are advancing the work of a recognized nonprofit organization. Donations of money or items to nonprofit organizations are always tax-deductible. If you are acting as a foster-parent to a pet through a federally recognized 501(c)(3) organization, your care expenses can be claimed as deductions. However, if you are simply rescuing or fostering pets yourself– without affiliation with a nonprofit– your expenses are not deductible. In addition, time spent volunteering is not tax-deductible. Only tangible funds or items spent are considered deductible expenses.
You can deduct most pet care expenses for formally fostered pets. Expenses that relate directly to foster pet care are tax-deductible. You can deduct expenses such as vet bills, boarding, pet food, collars, leashes, medication, cat litter, and toys if they were purchased exclusively for your fostered pet.
You may be able to claim a portion of your home as a tax deduction. If you dedicate a specific portion of your home to caring for fostered pets for a nonprofit organization, some of your living expenses may be deductible. If, for example, a room or out-building is used exclusively for the care and housing of fostered pets, you may also be able to claim a proportionate amount of your rent, mortgage, or utilities as tax deductions.
Pet care expenses for owned pets are generally not tax-deductible. In general, you can not claim a tax deduction for a pet that you own, even if that pet was rescued through a nonprofit. Once a pet is no longer in the possession of a nonprofit, you are not technically donating to the nonprofit by caring for the animal. The IRS would generally consider it fraudulent to deduct care expenses for a pet that you own.
…Except in special circumstances. It is possible to deduct care expenses for owned pets if you yourself operate a nonprofit organization. But beware: simply having a lot of rescued pets does not qualify you as a nonprofit. You must gain full nonprofit accreditation to be able to claim the expenses for your pets.
Working animals are another exception. If you own a working animal of any kind, you may be able to deduct its care expenses from your self-employment taxes. To qualify as a business deduction, the animal must be used primarily or exclusively for working purposes, such as drafting, herding, or guarding.
Service animals qualify as a medical expense deduction. If you (or one of your dependents) has a disability that necessitates the use of a service animal, such as a seeing-eye dog, the cost of buying, training, and caring for the animal qualifies as a medical expense. Understand that you can not retroactively label your pet a service animal simply because it helps you with your disability in some way. It must be formally trained and recognized as a working animal.
Breeders can also claim pets as business expenses. If you breed pets as a career-not as a backyard hobby-you can fully claim the cost of all your vet bills, pet food, litter, and other care expenses for the pets you are breeding. If you have a space on your property dedicated exclusively to breeding, it is also a viable business deduction. Bear in mind that the IRS will not allow you to claim business losses relating to pet care for more than 3 years in a row; this is to discourage casual breeders from falsely claiming the expense.
In all cases when pet care expenses might be tax deductible, it is crucial to maintain records and receipts of all expenses, particularly if the deduction will amount to more than $250. Although pet care deductions aren’t an automatic red-flag for an audit, they may raise your chances of being audited by the IRS, so it is very important to maintain honest and accurate documentation to support the deduction. In many cases, it is best to simply avoid claiming a pet care deduction at all.
Unfortunately, while tax deductions are available for a few pet owners, they are the exception rather than the norm. Pet care generally does not qualify as a tax-deductible expense. However, good news for pet owners may be on its way. In 2009, representative Thaddeus McCotter of Michigan introduced the Humanity and Pets Partnered Through the Years, or HAPPY, bill, which, if passed, would allow all pet guardians to claim a deduction of up to $3,500 per year for the care of dependent pets. The bill has not yet been codified into law, but you can help by reading the bill and contacting your representative. In time, responsible pet guardians may be able to deduct care expenses from our federal taxes.
For more information about deducting pet care expenses from your taxes, see publications 535, 225, and 502 from the IRS to see which, if any, deductions apply to your pet. Consider consulting a personal accountant for help claiming pet-related expenses.