Tag: service dogs

Posted on by Jan Roberg

Claiming a Dog as a Medical Expense

There are only two places where you could claim a dog on your tax return. The first is as a medical expense and the second is as a business expense.   Most importantly, it has to be a legitimate expense.  Dog expenses claimed on a tax return are likely to get audited so you’ll want plenty of documentation.

You may never, NEVER, claim your dog as a dependent on your taxes.

Today I want to look at dogs as a medical expense.  According to the IRS medical expense publication:  You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually-impaired or hearing impaired person, or a person with other physical disabilities. 

A seeing eye dog is an easily proved legitimate medical expense that you can deduct.  The same goes for a hearing assist dog. Note that the IRS definition only discusses “physical” disabilities. Mental disabilities are conspicuously absent from this category.

If your service dog is meant to help with a mental disability, you may not win the deduction in the event of an audit.  That doesn’t mean shouldn’t claim a legitimate mental health service dog. You just need to recognize that the bar is going to be set higher in the event of an audit.

 Here’s a question to ask yourself—if you were to be audited for your dog expense, could you obtain written letters from your doctor that your dog is necessary for you to work or function?  This is important. 

I worked on an audit once where the man had claimed his dog as a medical expense.  The IRS auditor was willing to allow the expense if the man obtained a letter from his psychiatrist. All it needed to say was that yes, the dog was part of the man’s treatment.   Although the psychiatrist admitted that he had recommended that the man get a dog, he refused to issue a letter. He said the dog was a good idea, but not official treatment. We lost the case. 

If you are self-employed, you may be able to claim your service animal as an impairment related work expense.  To qualify here, you must have a physical or mental disability that functionally limits your being employed. Or, have a physical or mental impairment that substantially limits one or more of your major life activities such as performing manual tasks, walking, speaking, breathing, learning, or working.  If you’re able to claim your service dog as a business expense in this way, it’s usually a better deduction for you than the medical expense deduction. (A business expense is a direct write-off, a medical expense has other hoops before you get any benefit.)

I cannot stress enough the importance of legitimacy here.   You can’t just go online and purchase a “service dog” vest for your pooch and take him to work with you.  The service your dog provides must be necessary for you to do your work in a satisfactory manner.

 If you intend to claim a dog as a medical expense (other than a seeing eye or hearing assist dog), it is absolutely essential that you have the support of your doctor.  I’d get the letter from your doctor before claiming the dog on your taxes. Keep it with your tax paperwork in case you need it later.  If your doctor refuses to give you a letter, it’s a good hint that you shouldn’t try to claim your dog as a medical deduction.

Posted on by Jan Roberg

A Dog as a Business Tax Deduction

Welsh corgi Pembroke red white color with a long tail grazing sheep. Sports standard for dogs on the presence of herding instinct. A beautiful and intelligent little shepherd dog.

The first thing you need to know is that you can’t claim your dog as a dependent on your tax return.  Never!   Don’t even think about it.  There are no special rules for St. Bernard’s or Great Danes.  It doesn’t matter how much your dog depends on you or that he’s a regular member of the family.  A dog can never be claimed as a dependent on your U.S. income tax return.

There are two places you can claim a dog on a tax return, as a medical expense, such as a service dog, or as a business expense.  This post is about claiming your dog as a business expense. 

If you intend to claim your dog as a business expense, you have to remember the two most important words for business expenses:  regular and necessary.  Is the dog a regular and necessary expense for your business?  For example:  my dog likes to help me when I work from my home office.   She guards my door and barks at the UPS truck. As you might have guessed, I cannot claim my dog as a business expense.  Her service to my company is neither regular, nor necessary.  

Real working dogs, on the other hand, are a legitimate business expense.  Sheep herders, guard dogs, bomb sniffers and rescue dogs all are legitimate working dogs.  I know a dog that used to star in the dog program at Busch Gardens, that’s a legitimate working dog.

Breeding dogs can be a little trickier.  A real dog breeder is a legitimate business.  Where it gets a little tricky is that fine line between dog breeding as a hobby versus breeding as a business.  If you purchase a puppy—with the intent of breeding it when it grows up, you can’t write it off yet. You can’t breed a puppy so it’s not working yet.

If you are claiming a dog as a business expense, you really need to make sure you’re on the up and up.  A dog on your return is going to be a red flag so you start out with the assumption that you will be audited.  Document everything.  Have receipts for your expenses, and proof that your dog is a necessary and regular expense for your business.  Dot your i’s and cross your t’s and you’ll be okay.

Don’t be greedy! Only claim legitimate business expenses. If you own 4 dogs and 2 of them are pets, you can’t write off the dog food and vet expenses for the non-working dogs.

Obey your state and city laws! If you’re claiming a dog breeding business on your federal tax return, and you live in a city that doesn’t allow dog breeding, you’re going to have some explaining to do. That’s one of the rules for owning a business – know your state and local business laws. So do your homework.

Remember, if your dog is a pet, let it be a pet and don’t try to write it off on your tax return.

For more information check out this article from the AKC web-site: Tax Tips for Dog Breeders

Posted on by Jan Roberg

Claiming Your Dog on Your Tax Return: Part 1

Seeing Eye Dog

 

The first thing you need to know is that you can’t claim your dog as a dependent on your tax return.  Never!   Don’t even think about it.  There are no special rules for St. Bernard’s or Great Danes.  It doesn’t matter how much your dog depends on you or that he’s a regular member of the family.  A dog can never be claimed as a dependent on your U.S. income tax return.

 

There are only two places where you could claim a dog on your tax return; the first is as a medical expense and the second is as a business expense.   Most importantly, it has to be a legitimate expense.  Dog expenses claimed on a tax return are likely to get audited.   You’ll want plenty of documentation.

 

Let’s look at medical expenses today.  I’ll post about dogs as a business expense later this week.  According to the IRS medical expense publication:  You can include in medical expenses the costs of buying, training, and maintain a guide dog or other service animal to assist a visually-impaired or hearing impaired person, or a person with other physical disabilities.

 

If you have a seeing eye dog or a hearing assist dog, then you’ve got an easily proved legitimate expense.  Note that the IRS definition discusses “physical” disabilities, mental disabilities are conspicuously absent from this category.

 

If your service dog is meant to help with a mental disability, you may be able to claim the animal under “impairment-related work expenses.”   This might actually work out to be an even better deduction than as a medical expense, if you qualify.

 

In order to be considered as disabled to claim an impairment-related work expense, you must have a physical or mental disability that functionally limits your being employed, or a physical or mental impairment that substantially limits one or more of your major life activities such as performing manual tasks, walking, speaking, breathing, learning, or working. 

 

I cannot stress enough the importance of legitimacy here.   You can’t just go online and purchase a “service dog” vest for your pooch and take him to work with you.  The service your dog provides must be necessary for you to do your work in a satisfactory manner.

 

Here’s a question to ask yourself—if you were to be audited for your dog expense, could you obtain written letters from your doctor and your employer that your dog is necessary for you to work?  This is important.  I assisted an audit once where the man had claimed his dog as a medical expense.  The auditor was willing to allow the expense if the man obtained a letter from his psychiatrist that yes, the dog was part of the man’s treatment.  Although the psychiatrist admitted that he had recommended that the man get a dog, he would not issue a letter stating the dog was part of the man’s treatment and the case was lost.  If you intend to claim a dog as a medical expense (other than a seeing eye or hearing assist dog), it is absolutely essential that you have the support of your doctor.