1. Guide Dogs
If you’re visually impaired or hearing disabled, your service dog is a legitimate expense. That means, under IRS Publication 502, you can deduct your dog's medical and dental expenses, some of which may include:
The animal’s purchase price
Their training costs
Their maintenance costs like food, grooming and veterinary care
2. Trained Therapy Animals
There are other physical disabilities and mental conditions recognized by the government that benefit from a trained companion. If you have a therapy dog breed that's a certified therapy animal, the same maintenance costs can also count as a medical expense.
You need an official diagnosis; pets without certification are unlikely to pass with the IRS. As with all other medical expenses, though, you can only claim those over 10 percent of your gross income or 7.5 percent for seniors, over 65.
3. Raising Guide and Therapy Dogs
You might not need a guide or therapy dog yourself, but if you are raising and/or training any type of assistance dogs that are certified animals for a recognized organization, your expenses are a charitable deduction.
You’ll need to keep your receipts, and an itemized list of all expenses, the same as with all deductions, so make sure your accounting is in check.
4. Guard Dogs and Other Animals
This one only applies to businesses where your animal is an ordinary and necessary part of the workplace, not just a welcome addition. You’ll need accurate records of your dog's hours spent on the job, and if you can actively document their protection skills, that’s even better.
Dogs need to be the right breed too, or look suitable to their task. A poodle’s bark doesn’t make it a guard dog, according to the IRS, but there have been cases where cats have been employed for their mice catching skills.
The value of your animal must also depreciate with age (like a piece of equipment).
5. Farm Dogs
Guard dog breeds aren’t the only ones on the job, as any farmer can tell you. Many farm dog breeds can also get on the list. Something like a good sheep dog can definitely be a vital part of raising and protecting livestock. Outdoor animals might keep pests and wildlife away from your crop too.
The key is being able to prove that these are working animals, not regular pets.
6. When You and Your Pet Move to a New Home before 2018 after that this is no longer applicable
There aren't many deductions that apply to pets, but one exception is when you're moving, and your animals need some kind of special pet transportation, such travel crates or any other equipment.
That can fall under IRS Publication 521 – Moving Expenses. The other option is to file an above-the-line deduction, using the long Form 1040 and Form 3903, which can include all your moving costs.
7. Professional Dog Breeders
Sometimes, dogs are your business because you are a professional breeder. Even breeding as a hobby produces taxable income, but the total of any itemized deductions on your Schedule A form have to be more than 2 percent of your gross breeding income.
You have to make a profit for expenses to be deductible, which for many hobbyists just isn’t the case. Since you’re running a dog breeding business, that means you have to follow local zoning rules.
You may need to be ready for an IRS inspection as well in order to show you're following any other rules that apply. But if you're doing it all legitimately, don't worry about it.
8. Dog Show Prize Winners or Animal Movie Stars
We all think our pets are cute enough to be stars, but some actually are stars.
The business of dog modeling/acting is becoming more popular, and dogs might be in TV commercials, have a part on a TV show and even become pet movie stars, thus generating regular income. If they are big prize winners, and that’s a major part of your yearly income, that’s also a legitimate dog related business.
Not only does this mean you can list some things on your Schedule C form, but you might also be able to claim “ordinary and necessary” expenses and “other” business expenses.
Dogs that are winners of show dog competitions like Westminster that go on to advertise something and generate income are also contenders for tax deductions. If this is the case for you and your canine companion, it's best to work with a CPA, lawyer or other tax professional to be sure that you take all the deductions possible.
