The Tax Deduction You Might Be Eligible For If You Own A Pet

Usually, you can't cut down your tax bill because you own a pet. But there are some special situations. If your pet is part of your business — not merely as office companions — like a guard dog watching over your property, or a trained companion that helps with a medical condition, or if the dog does specific types of work, you could claim some costs. For example, if your pet is a trained service animal that helps with a disability, you can include costs for owning and caring for the pet. 

Pets that provide emotional support usually don't count for these tax breaks unless they're medically necessary for serious mental health issues. The IRS needs to see that the pet's job is an "ordinary and necessary" part of your work. If that's the case, you can write off their costs, even if the pet is insured, as long as these expenses are directly related to their duties. 

Pets used in entertainment, breeding, or sports might also get you some tax breaks. For example, a racehorse or a dog that acts in movies could let you deduct costs related to their jobs. This includes money spent on training, travel, and special equipment, but only when they're actively working but costs for personal care during their off hours can't be deducted. If you own reptiles or exotic pets, they aren't recognized for service or work purposes, so they don't qualify.

Once you confirm that your pet qualifies under IRS rules, what expenses can you deduct? As a guide, note that the costs must be directly connected to the pet's job, whether it's in medical support, business, or making money. For certified service animals, you can deduct expenses such as vet visits, prescription meds, specialized training, and necessary gear like harnesses for guide dogs.

For pets in business settings: guard dogs, breeding livestock, or entertainment animals, include expenses like food, grooming, training, and vet care that directly relate to their jobs. For example, a therapy dog used in a counseling practice might let you write off travel mileage for client visits or liability insurance related to their work. Performance animals, such as show horses or pets trained for movies, qualify for deductions on travel to events, competition entry fees, and costumes or props. However, costs incurred during downtime, like boarding in the off-season, typically can't be deducted.

The IRS has yet to issue formal guidelines for pet influencers, but animals generating income via sponsorships, ads, or merchandise sales may qualify for deductions. Expenses like photography equipment, website hosting, or marketing agencies can be written off if they're essential to revenue generation. Keep in mind, the IRS scrutinizes "hobby vs. business" distinctions, so you have to prove consistent income and professional intent.

The IRS requires up-to-date records to back up every expense. For service animals, keep itemized receipts for vet care, training, and prescription meds, plus a letter from a healthcare provider that confirms the animal's medical need. For business or performance animals, you should have logs that connect expenses to money-making activities. This could be a calendar that shows a guard dog's patrol times or a spreadsheet that matches breeding costs to sales. Pet influencers need to keep contracts, income statements, and receipts for marketing or production costs.

Deductible expenses are in two categories: medical (Schedule A) or business (Schedule C). Costs for service animals can be deducted as medical expenses if they go beyond 7.5% of your Adjusted Gross Income (AGI) and are related to managing a disability. For instance, grooming costs for a therapy dog are deductible under Schedule C if the dog is essential to a clinical practice. Performance animals or pet influencers might need Form 2106 for unreimbursed employee expenses if the animal is part of freelance work. These are important when you consider how much Americans spend on their pets.

Remember, you can't deduct expenses from hobby-based activities, like occasional influencer income — the IRS wants to see a profit motive, which could mean showing income for three years, hence, keep your records for three to seven years, depending on your state's rules. For service animals, get an updated letter from a healthcare provider every year to show there's still a need.