After the economic fallout from the COVID-19 pandemic, everyone could use a break on their taxes. Even though pet parenting might feel like a full-time job, you can’t claim them as a dependent on your tax return. But you might be able to qualify for pet-related tax deductions that can help you keep more of your hard-earned money in your pocket.
Potential Tax Deductions for Pet Owners
Pet-related tax deductions only apply to specific situations. They’re often associated with service animals and pets that are a part of a business.
Still, you may be able to claim deductions if you and your pet meet certain criteria. You could write off the cost of a variety of expenses, such as:
- Veterinary care
- Food necessities
- Pet supplies
You should consult with a tax professional to see if you qualify before trying to claim a pet tax deduction on your return.
1. Tax Deductions for Service Animals
Anyone can deduct medical expenses you paid during the year that exceed 7.5% of your adjusted gross income from your taxes. As such, you may be able to get a deduction for pet expenses if your pet helps you in a medical capacity or performs certain services.
For example, people who are blind or hearing impaired and rely on a guide dog may be able to claim a deduction for training and caring for the dog. Similarly, veterans and others suffering from PTSD may be able to claim a tax deduction for a dog that performs specific services, like these:
In some cases, you may be able to claim a tax deduction for the costs of keeping therapy or emotional support animals (ESAs). Remember that even though every pet provides emotional support, not every pet qualifies for tax deductions.
You must be able to prove that your animal helps you treat a diagnosed mental or physical need. Be prepared to provide a note from your physician as proof that you need a service or support animal.
2. Tax Deductions for Working Animals
If you’re a business owner, you may be able to get a tax deduction if your pet provides a service for your business. In this case, you’d be claiming a business expense deduction, so you’d have to be able to prove that the cost of keeping your pet is a necessary part of operating your business.
For example, you might be able to claim a deduction if you rely on a cat to protect your business from pests or keep a guard dog on the premises for protection.
If you want to claim this type of pet tax deduction, hold on to all your receipts for caretaking expenses. Examples of purchases include food and veterinarian costs. You should also keep a record of how much time the animal spends at your business.
3. Tax Deductions for Performance Animals
If your pets perform in some way that earns you income, you may be able to claim them as a business expense. For example, you might ride horses as a hobby. But if you perform by riding a horse and make an income from it, the IRS might consider the cost of care for that horse as a business expense.
If your pet appears in commercials, television programs, movies, or print advertisements, they could be considered part of a business venture. The same could be true if your cat is the star of your monetized YouTube channel. Just be sure to keep accurate records of every expense related to your pet and the activity that earns income.
4. Tax Deductions for Fostering Pets
If you foster animals, you might be able to get a tax break on your income return. Every expense you pay caring for foster animals could be deducted as charitable donations if the animals are from a qualified nonprofit.
Most nonprofits will pay for the cost of food and veterinary care if you foster pets for them. But anything you pay out of pocket that’s necessary for the care of the animals could be deductible.
Volunteers at animal shelters or rescue organizations you may be able to deduct fuel costs, so keep track of your mileage. Note that this pet tax deduction only applies to driving done in service to the organization’s mission, not to your commute.
5. Tax Deductions for Pet-Related Moving Expenses
Finally, you may be able to deduct the costs of transferring your pet to your new home, but only if you meet certain conditions established by the IRS:
- The move must closely relate to the start of work.
- Your new primary job location must be at least 50 miles farther from your old home than your previous job location.
- After the move, you must work full-time at your new job for at least 39 weeks the first year.
How to Claim Pet-Related Tax Deductions
Before you start crunching the numbers, let’s explore your options when it comes to tax deductions.
Tax Deductions vs. Tax Credits
A tax deduction lowers your taxable income. If you have an income of $40,000 and you get a deduction of $1,000, you’ll be taxed as if you have an income of $39,000.
A tax credit is a dollar-for-dollar reduction on your overall tax bill.
Let’s say you have an income of $40,000 and you’re taxed at a rate of 15%. That means you’d owe $6,000. But if you qualify for a $1,000 tax credit, you’d only owe $5,000.
Standard Deduction vs. Itemized Deduction
When most people file their taxes, they take the standard deduction, a number set by the IRS (updated annually) that you’re allowed to deduct from your taxable income.
When filing in 2021 for the 2020 tax year, Single taxpayers can take a standard deduction of $12,400. Those who are Married Filing Jointly can take a standard deduction of $24,800. According to the IRS, when you file your 2021 taxes in 2022, these deductions will increase by $150 and $300, respectively.
But you can also itemize your tax deductions if those itemizations amount to more than the standard deduction. This is how you take deductions for things like charitable donations and pet expenses.
If your itemized deductions don’t amount to much, you’re probably better off taking the standard deduction. But if they do, it’s worth calculating them so you can get the biggest tax deduction possible.
- The IRS allows pet-related tax deductions for those who meet specific qualifying criteria.
- If you have a pet that works in service or industry, or you work with a charitable organization, this may apply to your tax return.
- It’s best to consult with a tax professional who can determine your eligibility before claiming deductions for pets.
Foster/Rescue Parent & Director of Growth – Pawlicy Advisor
Edwin Plotts rescues and rehomes cats in Brooklyn, NY – while leading Pawlicy Advisor‘s brand growth. He’s a pet parent of two rescued sibling cats: Greyson and Babs. He’s also an avid volunteer with Flatbush Cats and The Toby Project.
(Opening Photo Courtesy of Matt Nelson on Unsplash)
(Third Photo Courtesy of Krista Mangulsone on Unsplash)