It’s the worst part of the year, but one of the very few things in life that are unavoidable: tax season. But unfortunately paying taxes is something we have to do, and Uncle Sam holds a mighty grudge if you cross him in this area.
The good news is that the IRS has provided for many ways that dog owners can deduct expenses related to their pup. Many people qualify for the dog tax deductions you’ll see below and don’t even realize it. So can you claim your dog on your taxes? Read on to see how you can save you money this year!
1. Working Dogs
There are a number of situations where a dog may be classified as a working dog for tax purposes. Medical service dogs are a good example. This includes seeing eye dogs for the vision-impaired and medical alert dogs, who are trained to sense if their owner is about to have a seizure. These dogs can also be trained to help the hearing impaired and physically disabled.
Working dogs are classified as such due to their special training. To qualify for a service dog tax deduction they must be licensed by their owner and also require special, certified documentation signed by a doctor. In addition, they must be easy to identify when in public, with something like a special vest or tags.
Security or guard dogs can also be classified as a working dog, but they must be used to guard a true place of business. Dogs used for security at a home or residence will not qualify.
Breeds that meet the qualifications to work as a security dog are Rottweilers, German Shepherds, and Dobermans. Proper records for the dog’s time on the job must be kept as well.
2. Therapy Dogs
Therapy dogs, like those used to provide comfort in places like hospitals or nursing homes, unfortunately, will not qualify as medical working dogs. You may, however, be able to write off your mileage driven as a charitable contribution.
Whether or not you are able to do this will depend on the IRS status of the organization you and your therapy dog are serving. If the group or organization is registered as a non-profit, then you may be able to qualify your miles as a deduction.
3. Performance/Show Dogs
In some cases, you can deduct expenses used for a dog involved in hobby shows or performances. A hobby (under Section A) is defined as “an activity entered into for enjoyment without a profit motive.”
Important things to consider when deciding if your dog meets the hobby requirement are that the competitions are only on an occasional basis and that you are only competing locally.
You will be able to deduct your expenses if your dog wins prize money at a competition and you also are able to file Schedule A.If you meet these requirements you may deduct your expenses for training and showing your dog.
It’s important to note, however, that the amount you may deduct is limited. Any expenses you incur can only be deducted up to the amount of income that your dog receives. For example, if your dog wins $50 and you spent $100 to enter them in the show, you would only be able to deduct $50.
One final catch: Your expenses related to showing your dog must be itemized with other miscellaneous deductions on your Schedule A, and that total must be above 2% of your adjusted gross income before the expenses are deductible.
4. Dog-Related Businesses
Businesses which are related to dogs, such as breeders or dog walkers, may also deduct business-related expenses. The cost of food, leashes, poop bags, mileage to pick up the dogs you walk, are a few examples of expenses that could be claimed.
It’s very important that you keep proper records so that you are able to prove to the IRS if needed, that your expenses were job-related and not purchases for your own personal pet.
Your income could prove important too, as some states will designate businesses earning under $600 a year as a hobby. This would leave you unable to deduct your expenses.
5. Fostered or Adopted Dogs
Expenses for which you are not reimbursed while fostering for an IRS qualified 501(c)(3) adoption organization are also tax deductible. All necessary expenses and procedures such as food and veterinary bills will qualify.
The mileage you drive on behalf of the charitable organization is also deductible at a rate of 14 cents per mile. Donations you make above and beyond your expenses are also able to be deducted.
The sum total of these expenses and donations you have incurred on behalf of the charity should be itemized under the charity section of Schedule A.
As with all other cases we’ve spoken of so far, it is very important that you keep very good records and save all receipts. You should also ask for a letter of documentation for your volunteer efforts from the shelter.
6. Moving Home
Shipping expenses you incur for moving your pet are deductible according to the IRS in Publication 521. You do not have to itemize your expenses, but you will need to file the long Form 1040 and Form 3903.
Form 3903 requires that the expenses be a normal part of moving expenses for your household. Essentially, this means that the distance must be far enough that moving expenses are unavoidable. So you’ll be out of luck if you’re just moving to a new town a short drive away.
The move must be work related and if you are moving by car you will not qualify. Your animal related shipping expense is the only thing you’ll be able to deduct but given the high costs of moving it’s worth the extra paperwork.
Hope this helps you save a bit this tax season! All information in this article is correct at the time of publication. Be sure to speak with a qualified tax professional for advice if you are unsure about anything.
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