In a NutshellYour 75-pound golden retriever may eat as much as a person, but you still can’t claim him as a dependent on your taxes — though 45% of pet owners wish they could. But, some tax breaks could help defray the cost of having a four-legged bestie.
This article was fact-checked by our editors and Christina Taylor, MBA, senior manager of tax operations for Credit Karma.
It’s impossible to put a price tag on the true value of owning a pet.
Stack companionship plus unconditional love on one side of the scale and the roughly $1,400 the ASPCA says caring for a small dog costs in the first year on the other side, and there’s just no contest for most pet owners. Still, wouldn’t it be nice if you could get something back for what you spend on food, healthcare, toys, licenses, pet sitting and accessories?
45% of pet owners think so, and they’d love to be able to declare their pets as dependents on their tax returns, according to a January 2018 survey of 2,004 Americans by Credit Karma Tax® and research company Qualtrics. What’s more, an optimistic third of those surveyed think being able to claim their pets as dependents will happen in their lifetime.
Friends without tax benefits
Nearly all (94%) of the pet owners surveyed by Credit Karma Tax® say they consider their pets members of their family. That could partially explain the desire to claim pets as dependents. After all, the IRS says a dependent may be a qualifying child or relative.
“While the tax code may not say pets can’t be claimed as dependents, it does require you to include the Social Security numbers of anyone you list as a dependent,” says Bethy Hardeman, chief consumer advocate at Credit Karma. “And I’ve never met a pet with a Social Security number.”
Of course, all this means you can’t claim your four-legged best friend as a dependent on your tax return — or reap any of the dependent benefits you might be able to get for a human family member. However, there are some pet-related tax breaks that can help you defray the cost of supporting the furriest family members.
Tax breaks for pet owners
Of those surveyed, 67% say they own pets, including dogs (75%), cats (49%), fish (10%), birds (5%) and other critters (8%). They, along with millions of other pet owners, contributed to the approximately $69 billion U.S. pet products industry in 2017.
Pet parents looking for pet-related tax breaks have a few possibilities to consider, including the moving expense deduction, healthcare-related deduction and even a business expense. Here are four potential tax breaks for pet owners.
1. Move over, Rover
Plenty of pet owners might say their pets actually own them. But when it’s time to make a long-distance move for a job, the IRS views your pets as part of your household possessions.
You may be able to deduct costs related to relocating your pet (and your belongings) if you meet the criteria for the moving expense deduction:
- You moved for work within the first 12 months of starting a new job.
- Your commute from home to work would have increased by at least 50 miles if you’d stayed in your old home.
- You work full time for at least 39 weeks of the first 12 months in your new location (rules differ slightly for the self-employed).
Not every moving-related expense is deductible (meals, for example, aren’t), so be sure to check out the IRS rules for the moving expense deduction.
Interestingly, 67% of those surveyed by Credit Karma Tax® didn’t know that you may be able to deduct the cost of moving your pet.
2. The best medicine
A majority, 88%, of surveyed pet owners say they believe that owning a pet provides mental and physical health benefits. Plenty of scientific research backs up their belief, including a study published late last year that indicates that owning a dog may lower your risk of cardiovascular disease.
You can’t deduct the cost of your pet’s medicine, but if your pet also serves your health in an official capacity — as a guide dog or other service animal, for example — your pet may be considered a qualified medical expense. You may be able to deduct the cost of buying and training your animal, as well as the pet’s food, grooming and veterinary care. The tax code allows you to deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income.
While survey respondents seemed to be aware of the possibility of claiming pet expenses as a medical expense deduction, they weren’t clear on when they can do so. Nearly 70% thought that the costs associated with a therapy dog count as a qualified medical expense. However, you can take a deduction for qualified expenses associated with your guide dog or other service animal, not your therapy animal.
3. Sharing the love
Your pet may have nothing to give but love, but your donation to a pet-related nonprofit could show you some love at tax time.
Charitable donations to a qualified organization may be tax deductible. Donations can be cash or goods. So if your pooch won’t eat that case of pricey gourmet pet food you bought, donating it to a qualified charity might allow you to recoup the fair market value of the product as a deduction on your taxes.
What’s more, if you foster pets for a 501(c)(3) organization, the unreimbursed expenses related to your fostering activities may be tax-deductible as a charitable contribution. The IRS allows the deduction of out-of-pocket expenses while serving as a volunteer for a qualifying organization.
Keep in mind that deductions for charitable contributions generally can’t exceed 50% of your adjusted gross income (and in some cases, the AGI limits are even lower), and your charitable donations can only be deducted if you itemize.
4. Mixing business and pleasure
Pets bring a lot of enjoyment to your life, but sometimes the line between pet and business assets can blur. Of course, if you run a pet-related business such as a pet product company or grooming salon, many of your deductible business expenses will be pet-related.
However, when your personal pet also serves a business function, you may be able to take deductions related to your pet’s care. The IRS says an expense is deductible if it is both ordinary (common and accepted for your type of business) and necessary (helpful and appropriate for your type of business). So if, for example, you run a business and “employ” dogs as guards or have cats who perform rodent control, the cost of their care may be considered a reasonable business expenses.
What’s more, if you raise a particular breed of pet as a hobby or show your purebred animal as a hobby, you may be able to deduct pet-related expenses, provided you earn income from your hobby. Keep in mind that you can generally only deduct hobby expenses up to the amount of hobby income you claim and you can deduct only if you itemize.
“Most pet owners would probably agree it’s impossible to put a price on the value their pets bring,” Hardeman says. “But there are some real costs, and fortunately, there are ways to defray those costs.”
Although you can’t claim your pets as dependents on your federal income tax return, it is possible to find tax breaks for pet owners by itemizing your deductions, including those for eligible pet-related moving expenses, medical expenses and charitable contributions.
Christina Taylor is senior manager of tax operations for Credit Karma. She has more than a dozen years of experience in tax, accounting and business operations. Christina founded her own accounting consultancy and managed it for more than six years. She co-developed an online DIY tax-preparation product, serving as chief operating officer for seven years. She is the current treasurer of the National Association of Computerized Tax Processors and holds a bachelor’s in business administration/accounting from Baker College and an MBA from Meredith College. You can find her on LinkedIn.