When is the Dog Deductible?

By: Kerry Freeman EA Tax Planning 1 Follower

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News Release                   

For Immediate Release                                  Contact: Kerry Freeman, EA

April 12, 2007                                                  (623) 518-2157


                                                                        Anthem, AZ 85086


When is the Dog Deductible?


Telling the IRS that your dog ate your return won’t get you off the hook for paying your 2006 federal income taxes, due April 17 this year. And even though she depends on you for all of her support, you are really asking for trouble if you try to claim the pooch as a dependent. Nevertheless, love and loyalty may not be all the benefits you can get from owning your dog—in the right circumstances, Kerry Freeman EA explains,  what  may be eligible for some dog-related tax deductions, as well.


What about those animals that provide a real service to businesses?


There is precedent for writing off pet food when the animal in question is fending off unwanted rodents in order to make a place of business safer for customers . And, expenses relating to guard dogs have been successfully claimed as deductions. Tax expert Kerry Freeman EA maintain that the IRS is more likely to accept these claims if the dog is of one of those intimidating breeds that is most successful in frightening off crooks and vandals (no Chihuahuas need apply) and it’s important that the dog is guarding inventory, such as cars at a dealership. Not unlike that home office that may allow you to deduct only a portion of certain total home expenses, only expenses relating to the dog in proportion to the total time he or she spends guarding the business may be deducted. The purchase price of the dog itself may not be deducted. However, in appropriate cases the value of the dog may be depreciated over its expected lifespan as determined by a local breeder.


What about animal adoption?


The adoption fee paid when adopting a dog from a rescue group, even one that is recognized as a 501c non-profit entity, is not deductible. Transactions in which you receive goods and services in exchange for payment seldom are. But, if you throw in an extra donation (i.e., above and beyond the price of obtaining the animal) to support the good works of the rescue organization, this may well qualify as a charitable contribution for which you could rightly claim a tax deduction. Just be sure to get a donation acknowledgement letter or other form of receipt proving that no goods or services were provided in exchange for your donation.


Fans of the annual Westminster Dog Show know that the “canine sport” business is flourishing. Show judges, trainers, and seminar presenters who provide training and education to dog show champion wannabes are just a few of the professionals in this industry who incur dog-related expenses that are legitimate write-offs. Veterinary bills, dog show equipment and vehicles to transport the competitors are all potentially deductible or partially deductible expenses; but, just as no two dogs are exactly alike, neither are two business income tax return situations. A qualified tax professional will tell you that in each of the scenarios described above, specific details must be considered to determine whether or not the deductions are legit. Doggie deductions aren’t seen every day and could possibly trigger an IRS audit.


Bottom line: to avoid winding up in the dog house with the IRS, Kerry Freeman and the National Association of Enrolled Agents (NAEA) encourages taxpayers to make sure their taxes are prepared by a licensed professional. You can ask Kerry Freeman question by calling 623-518-2157.


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Rowan Webb
Haha, this I had no idea about, could save people some hard earn money.
Jordan Bauer
Great Ideas... thanks for sharing...!