If you are a pet parent, you may be tempted to list your fur baby as a dependent on your tax return this year. And why not? You feed them like family. You clearly love them like family. And you are definitely spending money on them like they’re family. In fact, it’s estimated that pet owners spent $60.59 billion on their pets in 2015, according to market research by trade group American Pet Products Association.
While those expenses for 7 pet beds, 3 kinds of canned food and 12 types of treats for your spoiled lone wolf do add up, you unfortunately cannot claim your beloved pet as a qualifying child under current tax laws. However, there are still ways to save on certain expenses accrued for your furry companion. (Just make sure you do your research, and confirm everything with your accountant.)
Here are five tax deductions for you and your pets.
Medical deductions for service animals
If you have a guide dog or service animal, you may be able to deduct the expenses associated with buying, training and maintaining the animal to help with your disability. This includes food, grooming and veterinary care incurred to keep your special friend healthy so it can perform the job effectively.
To qualify, add up all of your medical and dental expenses. Anything that is more than 10% of your adjusted gross income (or if you were born before January 2, 1951, 7.5%) is deductible.
Consider the associated hobby costs
If you and your pet are take-no-prisoners champions at your local pet expo, you may be able to recoup the expenses from an occasional win or loss. How? Well that dog agility contest you and your furry friend compete in every year is actually a deductible expense. You can generally deduct associated costs up to the amount of your hobby income, aka contest winnings. With that said, your hobby expenses are actually itemized with other miscellaneous deductions, so the expense total must exceed 2% of your adjusted gross income to qualify. (And yes, you’ll have to report your winnings as taxable income.)
Don’t forget your business expenses
If your hobby starts raking in the big bucks, consider turning your love of competition into an actual business so you can write off even more expenses.
Kimberly Gauthier, who’s a dog nutrition blogger, runs the blog Keep the Tail Wagging. While she can’t write off the expenses of raising her dogs, such as food and supplies she would normally buy, she does deduct purchases for her blogging business and associated articles. For example, she deducted veterinary bills associated with research for an article on holistic vets.
With each blog post, the costs can add up though. “Google Sheets is an easy way to track costs and have access at all times,” recommends Gauthier, who’s also a corporate accountant. “I update my financials in Google Sheets as costs/revenue comes through so that I'm prepared to file my taxes at year end.”
For help on business expenses, review IRS Publication 535 (Business Expenses).
Claim all moving expenses
If you have ever moved long distance for a new job, you may already be aware you can deduct your expenses. But did you know the costs associated with bringing your pet along count, too? While there aren’t any specifics on qualifying the pet expenses, the IRS says “you can deduct the cost of shipping your car and your household pets to your new home.” “While we consider our pets family, the IRS takes the view that they are personal property,” says Sara Blackmore, a CPA of San Antonio-based firm ATKG. “If your moving costs qualify for the moving expense deduction, you can include the costs of relocating your pets, too.”
To qualify for the moving deduction, your move must meet these three criteria: your new job must be at least 50 miles farther from your old home than your old job location; the move and expenses are incurred within one year from your first day of work; and you must be employed full-time in the area of your new job location for at least 39 weeks during the year following your move.
To claim this tax deduction, fill out IRS Tax Form 3903 (Moving Expenses) and deduct them as an adjustment to your income on IRS Tax Form 1040 (U.S. Individual Income Tax Return). For help, review IRS Publication 521 (Moving Expenses).
Don’t forget about those charitable deductions
Texans have big hearts, especially when it comes to giving back. The average charitable contribution in Texas is $1,380, according to a February 2016 report of filed tax returns by the National Center for Charitable Statistics at the Urban Institute. We snagged the No. 5 spot as the most charitable state, falling in line behind Wyoming, South Dakota, Utah, and Oklahoma.
While there’s no way to tell, we at Brilliant Energy like to think many of those donations are in service to shelter animals. To help Texas achieve the No. 1 spot next year, make sure you report all of your charitable contributions to your favorite animal shelter on your next tax return.
If you foster animals from an IRS qualified 501(c)(3) charity, your associated expenses may also be deductible. In 2011, the U.S. Tax Court upheld a woman’s unreimbursed out-of-pocket expenses on her 2004 tax return. She was taking care of foster cats, and listed everything from the usual pet care costs of food and veterinary expenses to cleaning costs, like paper towels and trash bags. But her $12,068 deduction was reduced because she didn’t have a letter from the rescue group confirming her volunteer status, nor did she have all of her receipts.
Generally speaking, the IRS says your deduction can't be more than 50% of your adjusted gross income, but in some cases 20% and 30% limits may apply.
To claim this tax deduction, fill out IRS Tax Form Schedule A (Form 1040, Itemized Deductions) and/or IRS Tax Form 8283 (Noncash Charitable Contributions). For help, review IRS Publication 526 (Charitable Contributions)
Brilliant Energy, LLC does not provide tax advice. None of the information provided herein or otherwise made available hereby is intended as, and shall not be construed as, a recommendation of or substitute for the knowledge, expertise, skill, and/or judgment of any tax, legal, or other professional. You alone are responsible for obtaining such advice.