Tax Credit for Pets : Don’t Forget To Claim This Tax Season !

Tax credit for pets is a bonus to 69% of Americans who seek love, joy & affection from -dogs or cats, birds, or other animals. A January 2018 survey of 2,004 pet owners by Credit Karma Tax®  revealed 45% of pet owners wanted to declare their pets as dependent in their tax return. If you go by another survey conducted by LendingTree of 1,378 pet owners in September 2020 found that 47% of pet owners went into debt for maintaining their pets, you can realize why the pet tax credit is a great relief to taxpayers owning a pet. In this post, you will get answers to all your questions about getting tax credits for pets.

Tax credit for pets 1: Medical Deduction

For claiming the expense related to a pet under the “medical expense deduction, “you must prove (if IRS conducts an audit for your claim ) that the pet is vital for your survival -physical or emotional. It must be noted that the medical Deduction is allowed only if the medical care expense exceeds 10% of the Adjusted Gross Income (AGI).

Medical service animals

If you buy and maintain a guide dog or other service animal to assist a visually impaired or hearing-disabled per- son or a person with other physical disabilities. In that case, the following costs associated with the highly trained animals to execute specific medical tasks to help disabled people navigate daily life safely are tax deductible :

• Purchase cost of a trained animal
• Professional training costs
• Vet and medical care cost
• Service-related costs (grooming)

These service animals are certified to perform a service task for a specific person. 

Pet tax credit for emotional support animal 

If you are suffering from any of the following mental problems, you may make a case for a medical deduction for expenses on the pet.

• Anxiety
• ADHD
• Post-Traumatic Stress Disorder (PTSD)
• Agoraphobia (fear of leaving home)
• Depression
• Anxiety Disorders (both Generalized Anxiety and Social Anxiety)
• Panic Disorders

You should approach a licensed mental health professional (psychologist, therapist, doctor, social worker, licensed counselor, registered nurse, etc.) and request an Emotional Support Animal (ESA) letter. This letter is a recommendation from LMHP for your or your family member’s mental health and well-being. 

After this, you can make the legal case for claiming a medical deduction for buying and maintaining the Emotional Support Animal (Dog and cats fall under that ).

Tax credit for pets 2: Expense on Pets used for business 

Suppose you carry on business and buy dogs who guard your business premises for security purposes. In that case, the costs of such animals are a business expense and tax deductible.

It will be best to buy dogs that protect and secure the owner’s premises, like a German Shepherd, Doberman Pinscher, or a similar imposing breed. Also, keeping records of all expenses is a better idea to explain the claim if an IRS tax audit occurs adequately.

Can pet insurance be tax deductible?

If you can prove that the pets are for medical purpose or used for purpose of business , in my considered opinion , a case can be made for deduction of expense on insurace of pets . But , if fail to prove the use of pets for medical reasons or for business , it will always be regarded as a hobby expense and therefore not allowed to be deducted.

Tax credit for pets 3: Donations to Charity for Pets

Dog clubs recognized under section 501(c)(3) of IRC qualify you to claim a deduction for charity. Your costs for veterinarian visits, pet supplies, food, and other related expenses could be eligible.

Also note the famous case law, Van Dusen v. Commissioner, that approved the claim of expense incurred by animal rescuers. So, if you incur costs on rescuing the animals for approved charities fostering dogs and cats, you may claim the costs as a deduction. But you must maintain proper records, including invoices.