Can Pets Be Claimed as Tax Expenses?

Who among us that loves their pet would not want to be able to write off pet expenses on their taxes?   Everything from pet food to vet care, in the eye of a pet owner, would be deductible from taxes, sadly in most cases this is not allowed.  While an attempt at having veterinarian expenses allowed as deductible in the USA, has still not passed (The Happy Act, HR 3501), there are a few cases where animals, and their expenses, can be deducted.

What Animals can be Claimed on Taxes?

Most pets and their expenses cannot be claimed.  Generally what determines if a pet, and pet expenses, can be claimed, is if the it is used to make money, is a “working” animal, or if the animal is a service animal.

Pets Used as Service Animals

Animals, such as seeing eye dogs, are often considered to be medical needs. This is only the case when the animal has been assigned as such. In many cases the animal needs to be prescribed as a service animal by a doctor.

Pets that are Working Animals

Guard dogs are a good example of working animals, specifically when they are used for guarding a business. The business claims the dog as an expense.  Only a portion of a guard dog's expenses may be claimed, specifically in ratio to the time they spend "guarding".  Some dogs might only be used to guard a business at night, so 50% of the expenses may be claimed on taxes, as the animal is living as a "pet" for the other part of the time.  A dog that lives outside with sheep, and guards them all the time, could be considered fully deductible as a farm expense. 

Cats who are used for mousers may be considered working animals if their mousing is at a business (such as a cat kept at a warehouse or on the farm).  A pet house cat would not qualify.

Herding dogs are considered working animals and would be claimed as a farm expense.

Pets that are Used to Make Profit

This often applies more to livestock, and pets who are treated as livestock. If income from the animals is claimed, expenses can be as well. As an example, if a person is a rabbit breeder, with several hundred rabbits breeding for the pet store (or food) industry, they can claim expenses, as this is a business, but they must also report the income derived from sales.

The same would apply to dog breeders when they claim a profit, this is typically limited to mill breeders who breed pups for pet stores.  Most other dog breeders do not make (or claim) a profit and keep the dogs more as a hobby, or passion, than an income source.

When pets are used to make a profit they are claimed as a business expense, with the breeding operation being the “business".  There must be reasonable belief that the business will be profitable; a person keeping only a few hamsters or a few breeding dogs, is not an actual business and would really be just a hobby. 

Livestock animals used on a farm for the farming business can be claimed, but if the farmer also has a pet dog that stays in mostly in the house (and is not used for herding or guarding), then that dog cannot be claimed.  Horses kept as pleasure riding mounts, and their expenses, could not be claimed, however if the horses were used regularly for hire (trail rides and so forth) they could be claimed, or a percentage of their expenses could be claimed against the trail riding business that would have to be licensed as such.

Remember if you are in doubt check with a tax specialist in your area.  Laws can change at any time and may be different in different countries.