In honor of Valentine’s Day, I thought I’d do a post about the main squeeze in many people’s lives. The primary source of pure love without any sneaky motives … your pets!
There is always a joke that surfaces during tax season … I ask my clients, “Do you have any dependents?” and they reply — half jokingly/half hopefully — “Can I claim my dogs/cat/horse/pig/turtle?” Guess what … maybe you can!
If you are fostering an animal for a registered non-profit and you itemize your return, you may be able to write off your expenses as charitable deductions.
In 2011 the US Tax Court gave some very good guidance in the case Van Dusen v. Commissioner setting up the conditions under which your expenses for the care of foster animals actually CAN be deducted. Remember, these are for foster animals, not your personal pets.
Wait for it….here come my usual caveats – there ARE rules and guidelines and good record keeping requirements for a valid deduction. Much of the petitioner’s expenses were disallowed, not because they were not valid, but because of poor or untimely record keeping. So keep reading for my top 4 takeaways from the casd, take notes and always consult with a professional tax adviser for your specific circumstances.
- Fostering expenses are only deductible if they are in the service of a valid 501(c)(3) organization. You cannot foster a cute puppy you found left in a parking lot and write off the expenses. You must be in the service of a valid rescue or other non-profit animal intake organization. I also suggest getting a written acknowledgement from your organization confirming that you are one of their volunteers who fosters animals on their behalf.
- You absolutely cannot deduct items you would have paid for regardless of whether you were fostering the animal or not. If you own a farm or barn with livestock or horses, the fostering of an animal will not make that barn/farm deductible.
- You must keep good and contemporanous records and receipts. Say you own two dogs and foster two, any expenses directly related to the fosters (vet bills, etc) that can be identified as solely for the foster animal can be deducted. Toys, food, blankets that the animals do/can share must be prorated reasonably between personal pets and fosters.
- Any individual expense of $250 or greater must have a contemporaneous acknowledgement from the non-profit organization that the expense was a donation that you did not personally receive any tangible benefit from – this is critical! If you are fostering and paying for vet bills, each bill you pay that is over the threshold must be acknowledged accordingly by the organization.
Keep in mind that this post in not intended to give anyone carte blanche at deducting their pet’s expenses. BUT, the 2017 Tax Cut and Jobs Act severely limited many of the itemized deductions people used to take but actually increased deductible limits for charity so it’s definitely worth a look.
We’ll chat again soon!