Are Pets Tax Deductible? 6 Tax Breaks for Pet Owners

Posted in Tax • January 15, 2014

pet tax deduction

Pets play an important role in our lives. We feed them, clean them, play with them and spend some of the best times of our lives with them. We provide them with all the same medical care and comforts afforded to any one of our family members. After all, our dogs, cats and other diminutive friends are no different than people, really; they’re our family, so shouldn’t it seem obvious that Fido and Rex get the same tax return breaks as their human brethren?

Animal lovers have long lobbied for a formalized, nationwide pet tax deduction policy — something to compensate for what we spend annually at the groomer, the veterinarian or the pet store.

Thousands or millions of dollars? Think again. According to The Huffington Post, Americans spend some $45 billion a year on pet care.

In 2009, a Michigan senator introduced a bill that would give pet owners up to $3,500 a year in tax refunds for “qualified pet care” costs. It was an ambitious, heavily inclusive piece of lawmaking that would’ve saved pet owners a chunk of money; unfortuantely, the HAPPY Act (short for Humanity and Pets Partnered Through the Years) didn’t pass muster on Capitol Hill, despite a decent showing of public support.

In spite of the HAPPY Act’s demise, there are some examples of tax-deductible pet care for our four-legged friends.

Related: 9 Commonly Missed Tax Deductions That Can Add to Your Tax Return

Sad End to the HAPPY Act

HAPPY Act

Republican Sen.Thaddeus McCotter introduced H.R. 3501 in July 2009. McCotter had hoped that the bill, which he reportedly titled after the Rolling Stones song “Happy,” would allow people the tax write-off on their annual pet expenses they’d always wanted, but never seen.

HAPPY picked up a lot of traction in the second half of 2009, garnering endorsements from most every active animal welfare group: The Humane Society of the United States, the American Society for the Prevention of Cruelty to Animals (ASPCA), the Animal Law Coalition, the American Veterinary Medical Association and the Pet Industry Joint Advisory Council (according to Forbes).

An online petition also circulated and surpassed the 30,000-signature mark in favor of the legislation.

Some animal rights activists had also said at the time that the bill was more than just a tax break. The monetary refund, they noted, would help keep animals in the home, and reduce pet abandonment, for families hit hard in the recession who couldn’t afford the mounting costs to care for their pets.

HR 3501 languished in the House Committee on Ways and Means and never passed, leaving pet owners around the United States without an extra $3,500 to pocket after the April tax season.

Editors of the MyPet Health Guide speculated that the HAPPY Act failed because it gave our domesticated animal kin almost too much financial leverage, too many financial breaks that we homo sapiens get. Plus, the timing was bad; The Huffington Post alluded that proposing benefits for animals wasn’t a priority during the peaks of the health insurance and economic crises.

“Nothing,” said MyPet Health Guide, “raises an accountant’s hackles more than seeing ‘four dependents’ listed on the tax return of a single man with a dog, two fish, and a ferret.”

Keep reading: Tempting (But Illegal) Tax Deductions

Pricey Pets

Like raising children, taking care of pets can be an expensive proposition that leaves our search to save money on pet care a full-time job. Between food, checkups, health insurance and toys, it can become a true labor of love when considering what we pay each year.

pricey petsLike any other household or utility bill, the costs of owning a pet adds up per animal. Courtesy of the ASPCA:

  • Small dog: $1,314
  • Medium dog: $1,580
  • Large dog: $1,843
  • Cat: $1,035
  • Rabbit: $1,055
  • Guinea Pig: $705
  • Small mammal: $340
  • Small bird: $270
  • Fish: $235

Since no national law exists on the books, none of these expenses are deductible. And the IRS won’t budge if you try to claim your dog or cat come tax season — no matter how human your bond is.

Animal owners should listen up — your pets don’t have to be left in the tax doghouse. There are a few caveats and exceptions to the rules that might qualify you for some tax relief this season.

Related: The Strangest Taxes and Deductions by U.S. State

Are Pets Tax Deductible?

Your family of ferrets or school of goldfish might not be tax exempt, but if you’re dead set on getting a tax refund this year, look into some of the options below. Some might sound outside the realm of the animal kingdom — your dog or cat as a business write-off? — but qualify, nonetheless. And it’s easier than getting a set of paw prints to sign that W-2.

1. Moving the family pets

No pet is an island — at least to the taxman. Pets are property like any other household belonging, and can be taxed as such if you’re relocating, since moving costs are sometimes deductible. It might sound strange to lump Rover and Checkers in with your ottoman, sofa and dining room set, but when they’re tax exempt, who’s complaining?

2. Pet food

Is your dog or cat master of its own domain, keeping your property free of pests and unwanted vermin? Then their food comes tax-free.

Kiplinger wrote about the story of a couple who was allowed to write off the cost of cat food used to attract feral felines on their junkyard property. The wild cats reciprocated by hunting snakes and rats on the premises, making the junkyard safer for customers. Though the peculiar case went to tax court, IRS officials agreed in the end that the nomadic ninja cats could eat tax-free.

3. Guard dogs

pet tax deductions

“BEWARE OF DOG.” He’s tax exempt, with exceptions. Fifi the poodle with a badge won’t fly with the IRS. Entrepreneur Magazine says that the best tax-exempt guard dogs are the ones who look and play the part — pit bulls or German shepherds are naturally intimidating canines with a penchant for making good watchdogs, and thus, can qualify for the tax-free club.

Your dog must also be actually guarding something, like a gated home or valuable property. In this case, it’s the dog’s services, not the dog itself, being deducted.

4. Animal adoption fees

It’s generally believed that donations made to nonprofits such as churches and other charities are tax deductible. This is true, to an extent. Fees paid, or donations made, to animal shelters are not deductible — rescue organizations need initial funding to pay for operational costs like feeding the animals in their care.

Added donations, however, are technically tax-free. If you’re interested in adopting a pet in need of a loving home, this is a good way to welcome a new family member and make a tax deductible gift in one.

Photo credit: yomanimus

Related: Five Huge 2014 Tax Law Changes You Need to Know About

5. Service animals

Seeing-eye dogs and others with special training are tax exempt as per the IRS. This doesn’t mean that training your dog to fetch snacks for you while you veg out on the couch means living tax-free. By law, service dogs are licensed by their owners with special documentation and neck tags from a doctor.

6. Leader of the pack

Being a professional dog is hard work that deserves a tax break. If your pet also works in show business — think pageant presenters or agility trainers — they might be tax deductible.  Experts emphasize that if your dog is a well-trained Lassie, it must be documented, business-related and a reasonable expense.

Remember, the 2014 IRS tax deadline is Tuesday, April 15, so there’s plenty of time to configure your pets into your filing schedule. You might find your relationship is full of love, and free of taxes.

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