Can You Claim a Pet on Your Taxes?
Unfortunately, you cannot claim your pet as a dependent on your tax return according to the IRS (https://www.irs.gov/faqs/filing-requirements-status-dependents/dependents/dependents-2). Pets do not qualify for the dependency exemption. To claim someone as a dependent, they must be a qualifying child or relative based on relationship, residency, age, and financial support guidelines.
The IRS considers caring for a pet a personal expense rather than a dependent expense. Pets do not have social security numbers and cannot sign tax forms. While you may feel your furry friend or family member relies on you financially, they are not defined as dependents for filing purposes.
So can you claim your cat, dog, rabbit, or other pet on your taxes? Simply put, no. However, there are some instances where you may be able to deduct certain pet expenses if you use your pet for business or medical/therapy purposes. We’ll explore these potential deductions next.
Qualifying a Pet as a Dependent
While some pet owners wish they could claim their furry friends as dependents on their tax returns, the IRS has strict requirements that make it very difficult to do so. In order to claim a pet as a dependent, the animal must pass all five dependency tests:
- Relationship Test – The pet must be a member of your household for the entire year.
- Joint Return Test – If married, you must file jointly. You cannot claim a pet if filing separately.
- Citizenship Test – The pet must be a U.S. citizen or resident alien.
- Income Test – The pet’s gross income for the year must be less than the exemption amount ($4,300 for 2022).
- Support Test – You must provide over half the pet’s total support for the year.
In addition, IRS Publication 501 states that the dependent must be a “qualifying child” or “qualifying relative.” Pets do not fit either definition, except potentially service animals. You would also need to complete Form 1040 and attach Form 2120 listing the pet as a dependent.
The IRS does not consider pets to be dependents under normal circumstances. Only in very rare cases have pet owners been able to successfully claim an animal companion as a dependent by proving it is a certified service animal that provides essential daily support.
Documenting Expenses
There are certain pet expenses that may qualify as tax deductions if you itemize your deductions. According to SmartAsset, the IRS allows deductions for the costs of caring for pets that provide a medical service or income for their owners. Expenses like food, grooming, veterinary bills, and training costs can potentially be written off.
For the expenses to qualify, your pet must meet the definition of a service animal or working animal per IRS rules. The animals must be trained and actively used to benefit a person with disabilities or to provide income. Therapy animals, emotional support animals, and pets kept solely for companionship do not qualify.
Once you determine your pet meets the criteria, keep thorough documentation of the related expenses. Be sure to save receipts, invoices, bank statements, canceled checks, and credit card statements as proof. Track both recurring costs like food and one-time expenses such as veterinary bills. Good record keeping is key to substantiating your deductions if audited.
Filing Status Considerations
Your filing status can impact your ability to claim pet expenses. According to Yahoo Finance, the marital status you select on your tax return determines your standard deduction amount, tax brackets, and eligibility for certain credits and deductions. For example, the standard deduction for Married Filing Jointly filers is higher than the standard deduction for Single filers.
This means married couples who file jointly may be better positioned to itemize deductions like pet care expenses if those expenses combined with other itemized deductions exceed the higher standard deduction amount for joint filers. On the other hand, single filers have a lower standard deduction amount so they may find it easier to exceed this threshold by itemizing pet care expenses along with other deductible expenses.
However, there are also some tax benefits like the Earned Income Tax Credit that have more restrictive income thresholds for joint filers. So getting married could potentially impact eligibility for certain credits if joint income exceeds established limits. Consulting a tax professional can help assess how marital status impacts the optimal filing strategy.
Claiming the Pet Tax Deduction
You may be able to claim a deduction for certain pet expenses on your tax return, but there are specific requirements. To claim the pet tax deduction, you’ll need to itemize deductions on Schedule A of your Form 1040. Only pet expenses that exceed 2% of your adjusted gross income can be deducted.
Qualifying expenses include veterinary fees, grooming, pet food, medications, training, boarding, pet insurance premiums, licenses, and pet sitting and dog walking fees. To substantiate the expenses, you should keep detailed records such as receipts, canceled checks, and credit card statements. The expenses must be for legitimate medical care for your pet, not cosmetic or general health.
To take the deduction, enter the total amount of qualifying pet expenses for the tax year on line 16 of Schedule A. The deduction is subject to the 2% floor for miscellaneous itemized deductions. You’ll also need to file Form 1040 to report your itemized deductions.
While the IRS allows this deduction, there are strict record-keeping requirements. Consult a tax professional to ensure you’re claiming the deduction appropriately and maintaining the necessary documentation.
Limitations and Exceptions
There are limits on the amounts that can be deducted for pet expenses. According to the IRS, pet expenses are subject to the same rules and limits as any other medical expense deduction. This means pet owners can only deduct qualified expenses that exceed 10% of their adjusted gross income (7.5% if you are over age 65) for the year.
For example, if your adjusted gross income is $50,000 and you spent $5,000 on qualified pet care expenses, only $3,500 would be deductible ($5,000 minus 10% of $50,000). The IRS does not allow you to deduct expenses over these thresholds.
Additionally, the total amount you can deduct for all medical expenses, including pet care, cannot exceed your earned income for the year. So if you only earned $30,000 in a year, your total medical expense deduction is limited to $30,000.
It’s also worth noting that the IRS imposes limits on specific categories of pet care. For example, you can only deduct up to $250 per year for pet food, vitamins, grooming, and other supplies. Boarding and pet-sitting fees are capped at $5,000 per year. Over-the-counter medications are not deductible at all.
Consult IRS Publication 502 for full details on limitations for the medical and dental expenses deduction, including expenses for pets. Keep accurate records and receipts, and remember to adhere to the deduction rules and caps.
Audit Risks
Claiming a pet as a dependent can increase your chances of being audited by the IRS. According to sources, taking questionable deductions related to pets is a red flag that may trigger an audit.
One study found that being audited was several times more likely for those who took the pet deduction compared to the average taxpayer. The IRS looks closely at returns where taxpayers claim pets for the dependent exemption.
To avoid extra scrutiny, make sure you have thorough records and documentation showing your eligibility to claim your pet. Keep receipts for all pet expenses you intend to deduct. Also be prepared to demonstrate and justify your pet as a true dependent if challenged.
Consulting a tax professional can help strengthen your case and prepare you to respond confidently to any IRS inquiry. With the right documentation and preparation, you can often successfully claim qualifying pet expenses.
Sources:
https://www.cbsnews.com/news/3-tax-deductions-that-raise-the-chance-of-an-audit/
https://www.usatoday.com/story/money/taxes/2023/03/02/triggers-irs-tax-audit-red-flags/11106113002/
Other Tax Benefits
There are a few ways to get tax advantages for your pets beyond just taking deductions on your federal taxes. Here are some additional options pet owners may want to consider:
Start a pet-sitting business. If you take care of other people’s pets in your home, you may be able to deduct expenses related to your own pets as business expenses. You would report this income and take deductions on Schedule C. However, the IRS has limits on these types of deductions if the business is not profitable. Consult a tax professional before attempting this.
Open a pet health savings account. Some HSAs allow you to use pre-tax dollars to pay for vet bills if your pet is prescribed by your veterinarian. You need a qualifying high deductible health plan to contribute to an HSA. Contributions are tax-deductible and funds grow tax-free.
Donate to a pet charity. If you itemize deductions, you may be able to deduct charitable donations to qualified pet-related charities, such as shelters or rescue organizations. Be sure to substantiate donations and only deduct permissible amounts.
Consider state or local benefits. Some states offer tax credits or rebates for pet spay/neuter costs or pet adoption fees. Some localities offer deductions for pets. Be aware of what benefits may be available in your tax jurisdiction.
State and Local Laws
There are some variations in pet tax laws at the state and local levels. For example, according to SmartAsset, Hawaii, Illinois, and New York all allow some pet-related expenses to be deducted at the state level. Illinois permits taxpayers to deduct pet expenses related to training and maintaining service animals. New York allows some pet care expenses to be deducted for service animals or animals used in commercial activities. Hawaii allows pet owners to deduct up to $250 per household for pet care and veterinary expenses.
At the city level, Nashville, TN offers a “pet tax” deduction on property taxes for owners who spay or neuter their pets. El Paso, TX allows pet owners to deduct veterinary expenses on their city income taxes. So pet owners should be aware of any special deductions or credits that may be available based on the specific locality where they file their taxes. Consulting with a local accountant or checking state and city government websites can help uncover any location-based pet tax benefits.
Consult a Tax Professional
Claiming pet expenses on your taxes can get complicated, so it’s a good idea to consult with a qualified tax professional in certain situations. According to Pawlicy, you may need professional help if you have a service animal, want to claim your pet as a dependent, or have significant medical expenses over 7.5% of your adjusted gross income. A tax professional can review your unique circumstances and determine if you qualify for any pet-related deductions.
The tax experts at H&R Block also recommend seeing a professional if your pet requires special equipment or modifications to your home due to illness or disability. The rules surrounding these expenses can be complex. A tax pro can maximize your potential deduction while ensuring you comply with IRS regulations.
In summary, consult an experienced tax preparer or accountant if claiming unusual pet expenses, deducting a service animal, attempting to claim your pet as a dependent, or exceeding the medical expense deduction threshold. With the help of a tax professional, you can identify all qualifying pet expenses while avoiding common errors and audit triggers.
