October 19th, 2022
TOPIC: Pet Tax Write-Offs
This guide will teach you how to save on taxes when owning pets. If you or someone you know owns a pet, they can receive tax breaks if their pet meets certain criteria.
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Can You Save Money On Taxes By Owning Pets?
The short answer is yes. You can save money on taxes by owning pets.
Your pet must meet one of the four criteria to save on taxes.
- The pet must be contributing towards your income and business growth.
- The pet offers a professional service.
- You are dependent on the animal for medical reasons.
- You foster animals for a living.
If your pet meets one of the four criteria, you can write off expenses associated with taking care of the pet.
What Pet Expenses Can You Write Off?
Once you determine that your pet is eligible to be used as a tax write-off, you can then start keeping a record of the following expenses:
- Pet food
- Grooming services
- Pet Clothes
- Pet Insurance
- Medical bills
- Veterinary bills
- Training classes for your pet
Is The Pet Contributing Towards Business Income?
First, when writing off anything in your business, you have to justify why you are writing it off as a business expense.
The pet has to be involved in your business in some fashion.
So take, for example, a Youtuber/influencer who builds a business surrounding his pet dog.
The only content this Youtuber puts out is related to his pet dog. The dog has a YouTube channel, Facebook profile, Instagram profile, and even its own Twitter account.
In most cases, one could argue that when people view this influencer’s content, they are not viewing it to see the dog owner but rather the dog itself.
Therefore, the pet dog directly correlates to the money coming into the business.
As a result, all those dog expenses, such as doggy food, dog clothes, checkups, photoshoots, etc., are valid business expenses.
If you think about it, this kind of business would not exist without the dog looking pretty and in good health!
No income would come in without it, making the dog a business asset.
In this particular case, we were talking about the dog. However, this also applies to any other pet animal.
Suppose you want to claim the pet as a business expense.
In that case, it is recommended that you keep receipts related to their caretaking.
Also, keep track of how much time the pet spends in your business to help generate income.
Is The Pet Being Used To Support You?
For some people, pets are more than just cute little animals that follow and entertain the kids.
Sometimes these pets are a legitimate treatment for medical conditions and to help people with disabilities.
The IRS calls these pets service animals.
They define service animals as any animal trained to assist a person with a disability.
These animals are working animals and not pets.
The work or task of a trained service animal must be related to the person’s disability.
Here’s a list of services that work animals can provide:
- Guiding people who are blind/low vision
- Alerting people who are deaf/hard of hearing to sounds
- Pulling a wheelchair
- Carrying and picking up things for persons with a mobility impairment
- Alerting and protecting a person who is having a seizure
- Reminding a person with a mental impairment to take prescribed medications
- Calming a person with PTSD (Post Traumatic Stress Disorder)
Does Your Dog Have a Job?
Besides being service animals, other animals work full-time jobs like us humans.
One example of this is a guard dog.
Guard dogs are also considered a business asset. This is because they offer a service that protects your business from possible threats.
Hence, you can deduct expenses associated with caring for the dog and ensuring it can do its job properly.
This dog must be a certified guard dog and a traditional guard dog breed member.
This means your dog can’t be an 80lb Chihuahua (aka toy dog). It has to be believable that your dog can protect your business.
I know your tiny dog might feel like it can take on any threat, but unfortunately, the IRS doesn’t buy it.
On the other hand, a Tibetan mastiff is said to be the best guard dog in the world!
Do You Work For a Non-Profit?
Caring for foster animals is considered a charitable activity.
This means you could deduct expenses associated with taking care of an animal if it’s from a qualified non-profit organization.
Typically non-profits will cover expenses associated with caring for the animals you foster.
However, our government understands that sometimes an unexpected expense does arise.
If you have to pay out of pocket to care for the animal, you can deduct that cost as an expense in your tax return. But, of course, that is assuming the non-profit didn’t reimburse you for the out-of-pocket expense.
How Can I Write Off My Pet Expenses?
To write off your pet expenses, you will need to itemize your deductions instead of claiming the standard deductions.
You do this by adding up the dollar amount of each qualified expense over the past year.
This is why you’re recommended to keep good records and receipts of every expense you want to write off.
Good bookkeeping can make it easy to itemize your deductions and provide any proof that the IRS needs that shows your pet is tax deductible.
That said, it only makes sense to use itemized deductions if your standard deductions are less than your total amount of itemized deductions.
Note that the standard deduction for the year 2022 is:
- Married filing jointly – $25,900
- Single (Married filing separately) – $12,950
- Head of household – $19,400
If you’re filing single, all of your itemized deductions (including your pet deductions) must be greater than $12,950 for it to be worth claiming on your tax return.
Likewise, if you’re married, all of your itemized deductions must be greater than $25,900 for it to be worth claiming on your tax return.
Suppose your itemized deductions are not greater than the standard deduction.
In that case, it’s better not to write off your pet expenses on your tax return.
Ultimately the goal is to choose the option which gives you the biggest tax break possible. If you need help, we recommend talking to your local tax professional.
Want to learn more about taxes?
We created a blog showing the top 11 tax-friendly states to live in. So if you’re considering relocating to a place where you can save more money on taxes, this is a blog you don’t want to miss!
If you haven’t read that blog, click the link below to dig in!
