When Are Pet Expenses Tax-Deductible?

Rebecca Lake for SmartAsset Blog writes: When you’re trying to score a break at tax time, maxing out your deductions can potentially lower your bill or result in a bigger refund. Apart from the standard write-offs for things like mortgage interest or business travel, you may be able to claim more unusual expenses, including the cost of taking care of a pet. The IRS has certain rules about when pet expenses are tax-deductible, so if you’ve got some furry friends at home, here are a few scenarios where you might benefit.

You Require a Pet for Medical Reasons

Service animals can take many different forms, including dogs, cats and even miniature ponies. If you’re required to have a guide or therapy animal because you have a diagnosed medical condition, such as blindness, epilepsy or post-traumatic stress disorder, you may be able to deduct the cost of its care as a medical expense on your taxes.

In order to meet the IRS standards, though, your pet must be trained and certified as a service animal. The kinds of expenses you can deduct include the cost of training, food, grooming and veterinary care. For 2014, the deduction is limited to the amount by which your medical expenses exceed 10 percent of your gross income, or 7.5 percent if you’re over 65.

You Use a Guard Dog for Your Business

While you can’t technically put a dog on the payroll, you may still be able to deduct the cost of its care as a business expense if it’s used primarily to guard your premises and inventory. The IRS doesn’t allow you to write off the cost of buying the dog itself, but you can use the deduction for things like food, training, boarding and medical care. Keep in mind that it only applies to the dog’s working hours, not expenses incurred during the animal’s down time.

You Foster Pets in Your Home

Volunteering with a service animal agency or pet rescue organization is a great way to give back, and it can also pay off at tax time. If you foster pets, either in your home or on your property, you may be eligible to claim the deduction for unreimbursed expenses. That covers food, shelter, veterinary bills, grooming costs, litter and bedding materials. These expenses would qualify as charitable donations, which are deductible up to 50 percent of your adjusted gross income.

You Move for a New Job

Changing jobs can be a hectic experience, especially if you have to move. Fortunately, the IRS allows you to deduct some of the costs of moving, including amounts you pay to transport your pet to your new home. Specifically, you can write off the money you pay to have Fido shipped by air, sea or rail. Deductions for moving expenses have to meet the time and distance criteria, so you need to be sure your situation qualifies before claiming it on your taxes.

You’re a Professional Breeder

If breeding and selling dogs, cats or other animals is your primary occupation, there’s good news: not only can you deduct food, medical bills and boarding costs, but you can also write off any other ordinary and necessary expenses that running your business entails. This includes things like advertising, costs relating to the business use of your home, and travel expenses. If you breed animals as a hobby, you only qualify for the deduction if your expenses exceed 2 percent of your adjusted gross income and you itemize.

You’re a Law Enforcement Dog Handler

Some of the cost that goes along with maintaining a police dog may also qualify for a tax deduction if you’re not reimbursed for these expenses through your job. If the dog lives in your home when not on-duty and you’re responsible for buying its food or purchasing a kennel, you can generally claim them as a job-related expense.

3 Tips for Cutting Your Tax Bill

The number one rule when it comes to claiming deductions for pet care is to make sure you’re documenting your expenses carefully. If you include something that you know is deductible but you don’t have documentation to support it, you may run into trouble if you’re audited. You don’t want to end up in the doghouse with Uncle Sam, so hanging on to all of your receipts is a must.