It is the season -- tax season, that is. You are probably looking around your house thinking, "Hmmm what else can I deduct?"
Well, that furry friend of yours might be worth more than you think. Many people ask if they can deduct their pet. The short answer is no, but there are some exceptions. Don't just take our word for it, though. Talk to an accountant before trying to claim any of the deductions mentioned below.
Did you move?
Moving always gives you something to deduct. Typically, though. the move must be for work. The new job has to be at least 50 miles from the old one and you might be able to deduct the cost of moving your pets. A special form is needed.
Do you have a service dog?
If your dog is sick the medical expenses aren't deductible. But if you need a dog because of an illness or disability of your own, the expenses of keeping that animal can become legitimate medical expenses.
All of the costs of vet care, grooming and any other expense that animal needs to help you assistance could qualify.
Therapy animals also fall under this category, as long as you have a medical diagnosis. There are some exceptions though. There is a special threshold for deducting medical expenses -- 10 percent of adjusted gross income for those under age 65 -- before you can deduct guide-animal costs.
Is your dog a guard dog?
A guard dog is not one that just watches for the mailman. It has to be one that is protecting a business property. There are certain breeds that qualify. Although Chihuahuas bark a lot, I doubt the IRS would be too receptive.
Pet rescues or an animal shelter.
Most animal shelters are nonprofits, so if you decide to be a foster parent, you might be able to write off some expenses as a charitable donation. This includes food, supplies and any vet bills. You may also be able to get some mileage expenses.
The key is to keep good records of going back and forth to do work at the shelter or the IRS may challenge your claim. They may challenge your claim regardless so record-keeping is just a good habit to develop.
Is your pet your profession?
Do you show horses or dogs for a living? Are you an animal trainer? Do you breed cats? All of these are legitimate occupations. You might be able to count some or all of your pet expenses against the income they generate.
Be careful because there is a difference between a hobby and a business. Hobby losses are deductible only if you have gains and the hobby has to be a miscellaneous deduction, which can limit the amount you can actually claim. But you may be able to deduct all of your expenses for a business, even if it results in a net loss.
Every situation is different and you definitely want to talk to an accountant before you do this to avoid problems down the road.