It’s tax season once again. Time to take a paws as you research whatever tax breaks might help you get past April 17th as unscathed as possible. In some cases, there are some legitimate tax breaks where Uncle Sam will euphemistically assume the ‘best friend’ status, heretofore reserved for your pooch. In other instances, the tax man might be extending his hand for levies come due.
Bear in mind, as much as you consider your dogs family members, the IRS won’t let you claim your four-legged side-kicks as dependents.
But what was about service animals or working dogs? Is there anything in the tax code that will cut you a break [pun intended] in 2018, before our tax laws make some radical changes in 2019?
Are you ‘moving military’?
While moving expenses are no longer a viable tax break for the majority of us, the current tax laws do make an exception for those serving in the armed forces. If you are member of the military, you can deduct moving expenses pertaining to your household goods, and that includes your pets, since traditional pets such as dogs, cats and birds are considered part of your household.
If you are disabled or blind or otherwise physically impaired, your service dog expenses are tax deductible. This includes the purchase of the dog, along with its training fees and vet visits, as well as food and grooming fees to maintain the health of the animal so that it can perform its duties.
Pet owners with mental health conditions [such as PTSD], who can benefit from the help of a therapy dog can also qualify for these deductions, if these canines are certified as ‘service' or 'therapy' dogs.
If you foster a dog for an IRS qualified 501(c)(3) nonprofit organization, expenses such as food, medications, travel costs and supplies can be deducted.
“If you sign up to provide a service to care for a foster animal, and you are contributing the cost of food and care of that animal, then you are kind of considered to be providing a service to a charitable organization, and in limited circumstances, that could be a charity donation,” said Alison Flores of The Tax Institute at H&R Block – and eligible for a deduction. But the shelter or rescue that you are fostering animals for needs to be an approved 501(c)(3) organization. For instance, you can’t write off expenses “for an animal you just found on the street and took in,” notes Flores.
Working dogs can also qualify for deductions to cover their living expenses, including food, veterinary care and training related to their jobs. Some animals that could qualify include security dogs protecting a place of business. “In a limited amount of circumstances, this would be acceptable to the IRS, but documentation is very important,” said Flores. “You need to demonstrate a need for the animal and maintain really good records,” such as a diary or log book of their hours worked. However, be aware that all the revenue made for your performing pooch is considered taxable, and as such you’ll be required to pay taxes in accordance with your tax bracket.
The same holds true for dog-sharing, more commonly known as dog sitting and dog walking. Services such as DogVacay does send tax 1099 forms to those who provide this service, once the ‘dog worker’ earns over the threshold of 200 transactions or $20,000 per year. But on the flip side, similar to performing dogs, you can write off all the related expenses associated with this business, such as commuting expense getting to and from the homes of the dogs you walk for home-sit for.
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For all the cases I cited today, it is incumbent on you to seek out a tax professional to make sure you are dotting your “I’s” and crossing your “T’s.” A seasoned tax professional can help you identify additional business-related expenses to deduct, above and beyond the more obvious -- and also making sure you are not writing off an expense, which is no longer covered.
Here's hoping this year's Tax Day doesn't take a big bite out of your barking account!
Primary Source: Moneyish