Can You Claim a Tax Credit for Your Pets?

For most pet owners, the costs of a household pet are considered personal expenses and offer no tax benefit. The Internal Revenue Service (IRS) does not permit a deduction or credit for expenses like pet food, veterinary bills, or adoption fees. An animal companion also cannot be claimed as a dependent, regardless of how much a part of the family they may be.

Deducting Service Animal Expenses

An exception to the general rule involves service animals. The IRS allows for the deduction of costs associated with buying, training, and maintaining a service animal to assist with a physical or mental disability. These animals are not pets; they are trained to perform specific tasks for an individual with a disability, as defined by the Americans with Disabilities Act (ADA). Tasks can include guiding a person with impaired vision, alerting an individual with impaired hearing, or providing stability for someone with a mobility issue.

A service animal must be distinguished from an emotional support, therapy, or companion animal. While these animals provide comfort, they lack the specialized training to perform tasks related to a disability, and their costs are not deductible as a medical expense.

Qualifying expenses are treated as medical expenses, meaning they are deductible only if you itemize deductions on Schedule A of Form 1040. The deduction is subject to a limitation, as you can only deduct the portion of your total medical expenses that exceeds 7.5% of your Adjusted Gross Income (AGI). For example, if your AGI is $80,000, the threshold is $6,000, and you could only deduct medical expenses, including service animal costs, above that $6,000 amount.

Claiming Pets as a Business Expense

An animal’s costs can be deducted if it is an “ordinary and necessary” expense for conducting a trade or business. An ordinary expense is one that is common and accepted in your type of business, while a necessary expense is one that is helpful and appropriate. This standard is applied strictly, and the animal must serve a clear business purpose rather than simply being present at the business location.

Examples include a guard dog for a business premises like a junkyard or a cat used for pest control in a barn, warehouse, or grain silo. In these cases, the costs of food, veterinary care, and maintenance can be deducted as a business expense on a form like Schedule C for a sole proprietorship. These deductions directly reduce business income.

The IRS also scrutinizes whether an activity like animal breeding or showing is a business or a hobby. To qualify as a business, you must demonstrate a clear profit motive. If the activity is deemed a hobby, you cannot deduct expenses that exceed the income it generates.

Tax Benefits for Animal Rescue and Foster Activities

Individuals who provide foster care for animals through a qualified 501(c)(3) charitable organization can deduct their unreimbursed expenses. You cannot deduct costs for rescuing animals on your own initiative; the fostering must be done under the direction of a qualified group.

Deductible out-of-pocket costs that are not reimbursed by the organization can include:

• Pet food
• Supplies
• Medicines
• Veterinary bills

You can also deduct transportation expenses for trips to the veterinarian at the standard charitable mileage rate of 14 cents per mile. You must maintain reliable written records for all expenses, such as receipts or invoices. For any single contribution of $250 or more, you must obtain a written acknowledgment from the charity stating the contribution amount and whether you received anything in exchange.