A client asked him this question: Can I deduct my dog’s veterinarian expenses as medical expenses? The answer is a resounding “no.” But that does not mean that you cannot derive some tax benefits from costs associated with your pooch.
Scour your records to find pet-related expenses that may qualify for tax breaks. It might be more common than you think.
Here are four prime examples:
- Unleash a deduction. Although you can’t deduct vet expense as medical expenses, you may write off costs, subject to the usual limits based on adjusted gross income, if you (or a family member) need a guide dog to help with your vision or hearing. This may include grooming expenses and veterinary care that is necessary to ensure the dog can perform its duties. Similarly, if you have been diagnosed with a physical or mental condition that benefits from a trained therapy animal, those costs may also count as medical expenses. The pet must be certified as treatment for a specific diagnosed illness or medical condition.
- Keep taxes at bay. Does your business have a sign warning visitors to beware of the dog? You may have found that keeping an intimidating breed at the place of business overnight is a successful deterrent to theft. In this case, you may deduct certain costs as “ordinary and necessary” business expenses, including items like food, training, and veterinary bills. Keep good records of business activities.
- Seek tax shelter. Perhaps you volunteer to spend time at an animal shelter and have even adopted a dog or a cat that would have otherwise been euthanized. As a result, you may be able to deduct unreimbursed charitable-related expenses if you itemize. For instance, if you foster a pet, you can write off costs for food, supplies and vet visits. And do not forget to add travel cost to and from the animal shelter. In lieu of actual vehicle expenses, you can deduct 14 cents per mile.
- Show some trust. A pet Trust is one way you may be able to ensure your pet is cared for after you are gone. Typically, the owner sets up a trust and designates a trustee (e.g., a family member or friend) to hold assets for the benefit of the pet. Then the Trustee makes payments from the trust as needed. If handled properly, it should not create any adverse estate tax consequences. Check into the applicable state laws relating to this issue.
Small Business Tax Strategies