It’s that time of year again – taxes. Let’s be honest, we all try to find as many deductions as we possibly can, hoping for a large refund rather than a bill. And for those of us whose family members have four legs and fur, we can’t help but feel a bit shorted when it comes to deductions. After all, many of us see our dogs as kids, which are deductible.
But did you know there are situations where you can deduct some of your dog-related expenses on your taxes? The terms are pretty specific, but it’s worth looking into when you visit your accountant next month.
Jayson Mullin is the CEO at Top Tax Defenders, a tax resolution firm located in Houston, Texas. Mullin gave us the details on what may be deductible in terms of dog expenses.
#1 – Moving
A deduction is allowed when you move from one part of the country to another provided you ship the dog. This deduction is taken on Form 3903 as part of the normal moving expenses of the household. Remember, For moving expenses to be allowed a taxpayer must meet the requirements of Form 3903 (distance, work related, time period, etc.), says Mullin.
# 2 – Working dogs
Working dogs (for tax purposes) are defined as:
- Seeing eye dogs.
- Medical alert dogs – must be trained to detect impending seizures,help impaired hearing, etc. The key here is “special training” required. Medically necessary dogs are required to be licensed by their owner, require special documentation provided by a doctor and special dog tags, says Mullin. See your tax person for more information.
- Security dogs – must be used as security for a place of business (cannot be a private residence or a hobby farm – true business farms qualify). Must also be a “protection” breed such as a Rottweiler, German Shepherd Dog or Doberman. You also have to keep accurate records of time spent on the job.
- Dogs trained to find bed bugs.
In all of these cases, the cost of buying, training and maintaining the dog is deductible.
#3 – Therapy Dogs
Since they are not a service animal, therapy dogs do not qualify for the deductions mentioned above. However, Mullin says, “the taxpayer may be able to write off mileage as a charitable contribution. This is dependent on the organization’s status with the IRS.”
If the group you are working with as a therapy teams is a registered non-profit, you may qualify. It’s worth checking into at least.
#4 – Performance Dogs
Dogs used in hobbies such as show dogs or bird hunting may be deductible. If the dog wins prize money in the endeavor than the expenses incurred to train, show, etc., re deductible up to the winnings. To do this you must be able to file Schedule A.
Mullin says a hobby is defined as “an activity entered into for enjoyment without a profit motive.” They usually only compete locally and may receive occasional income (cash prize for agility, for example), he continues. “Because there isn’t a profit motive any expenses incurred are only deductible up to the amount of income received.
#5 – Breeding and Showing Business
If you breed dogs as a business the endeavor is deductible. Proper record keeping is very important to prove it isn’t a hobby.
Unlike the above hobbyists, businesses are motivated to make a profit. They may show dogs across the country or even internationally, Mullin says.
“A business may incur losses in excess of income while a hobby cannot,” he adds.
#6 – Fostering or Adoption
Fostering or adopting a dog from a qualified charity may be deductible. If the adoption fee is a donation it is deductible. However, if it is payment for the dogs care it isn’t.
It is important to read the invoice from the charity to make sure it says donation. Fostering a dog from a qualified charity is deductible. The deduction includes mileage, food, a portion of utilities and even cleaning supplies.
Dogs as Dependents?
Mullin also mentioned to us that there is a movement in the state of California to make medical expenses for dogs a deduction on the state income tax return.
“To my knowledge, this is the first attempt of its kind to add the deduction to the tax code and is specifically aimed at the family pet,” he added.
