Most taxpayers will likely agree that the US tax code is complicated and difficult to understand. It is, therefore, evident that some common tax myths have arisen over the years. And some of the most well-known myths revolve around tax deductions.
Some tax deductions that seem quite legitimate are, in fact, bogus, while others that seem unusual or even silly may receive favorable tax treatment.
You can deduct pet expenses.
As with several things in the tax code, your ability to deduct an expense depends on your legitimacy, usually for business or medical purposes. While it is not possible to deduct all of the meals you feed the family dog, there is a surprising variety of cases where you can deduct the pet's expenses.
If your pet generates income for you at the business level, you can probably deduct "ordinary and necessary" expenses. For example, if you have a dog that appears in advertisements, you may be able to deduct your pet expenses. If you are raising horses for breeding, this can also be a business, so your pet expenses may be deducted. If you are moving for business purposes, your pet's travel expenses may be deducted as you may want to cover Fluffy's ears; for this part, the IRS considers your pet as a possession.
For instance, say a landfill owner was able to deduct the cost of the cat food. Why was this deduction allowed? Because the owner used the food to attract neighborhood cats, which in turn kept their garden pest-free.
Your pet's medications are not tax-deductible, but if your pet contributes to your health and well-being, there may be other things. For example, suppose you need a guide dog or service animal. In that case, the IRS allows deductions for the costs of purchasing, training, and maintaining that animal, including food, veterinary care, and hygiene.
Five situations in which pets can be used for tax incentives
You can't claim your pets as dependents, but sometimes the IRS can help out in these cases.
For animal lovers who spend so much money on pets and hope to get some of their money back at tax time, here's the harsh, cold reality: Most of the time, you can't.
The IRS does not allow people to claim pets as dependents, despite the food and vet bills that can add up. However, in some cases, pets can contribute to the tax exemption.
Here are five ways your pet can help provide a tax break
Military members on the move: Military personnel may qualify for relocation tax credits, and pets may be considered part of this home.
When an accredited organization fosters a pet: Fostering a pet for an IRS-qualified nonprofit can allow people to deduct expenses such as food, medicine, travel, and supplies. The problem is that the shelter or rescue that a person is raising a pet for must be an organization approved by the IRS. People cannot deduct the cost of an animal taken on the street.
When pets are commercial animals: Pets hired for work, such as dogs or cats at work, which help control rodents in an office, can, in limited cases, be used as tax incentives. The key is to keep a good record of the work schedule of these pets.
Your pet as a service animal: People with physical disabilities or mental health issues which require assistance dogs for vision or hearing problems may be eligible for tax deductions to offset the costs of purchasing food, paying bills: veterinarians, and other taxes.
Your pet earns money: If your pet is famous for some reason and appears in print, online, or television advertisements, they may earn enough money to be taxable income for their owners. If this is the case, homeowners may qualify for deductions.
FOR MORE INFORMATION ON HOW FLYNN FINANCIAL GROUP, INC. CAN BEST HELP YOU WITH YOUR TAXES, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
THANKS FOR VISITING.
Flynn Financial Group Inc