Pets are more than companions; they’re our friends and members of our families. Having a pet can do wonders for both your mental and physical health. If you’re serious about providing the best possible medical care for your buddy, chances are you have pet insurance to ensure all of your four-footed companion’s medical needs can be met without having to worry about the expense.
Both veterinary medical care and pet insurance can be costly, and it would be wonderful if you could save a bit on April 15th by deducting your pet insurance from your overall income to lower your tax burden.
The IRS doesn’t permit pet owners to deduct pet insurance from their overall taxable income, except in specific circumstances involving service animals and working animals. Read on for more information on the circumstances under which the IRS gives you the green light to deduct pet insurance on your taxes.
Four-Legged Money Makers
If you have a cat, dog, or bunny on your hands that earn money, the IRS will let you deduct their pet insurance from your taxes as a business expense. Technically, the deduction has nothing to do with your animal being a pet but is because you’re using your animal to earn money through a business. The IRS is generally okay with owners deducting pet insurance of dogs that star in movies, cats that bring in money through social media channels, and bunnies that model for pet food campaigns.
Having a hotel with a pet cat that greets people at the desk probably won’t cut it with the IRS, but you’ll most likely be fine deducting pet insurance for your cat cafe’s feline stars.
Under some circumstances, pet insurance for farm dogs and cats, breeding animals, and guard dogs can be counted as business expenses. If your farm dog is involved in herding and your cat helps with pest control and lives in the barn, you might be able to deduct their pet insurance as a business expense. These animals cannot be household pets that only enjoy a daily romp in the great outdoors!
Breeding animals’ needs sometimes qualify for the business expense deduction, but you’ll need to show that you breed animals for a living. The deduction doesn’t apply to hobbyists and their critters. Also, you can deduct the expenses, including the pet insurance of your guard dog, provided it guards a place of business, not your home.
Remember to document your animal’s “duties” and how many hours they spend “working.” Make sure to keep meticulous track of your pet-related medical expenses and save receipts for everything, including medication, veterinary visits, and pet insurance premiums. You might even be able to deduct mileage for taking your working animal to and from the veterinarian but check with your accountant first.
Even though pet insurance may not be deductible from your taxes, it is definitely still worth getting one for your pet. To help you choose, we picked some of the top-rated ones on the market:
Top Rated Pet Insurance Companies:
Seeing Eye Dogs and Other Service Animals
The IRS will also allow owners of service animals to deduct pet insurance as a medical expense. Your animal must perform service animal duties as recognized under the American Disabilities Act (ADA). Your animal must have been “trained to do work or perform tasks for an individual with a disability” to be recognized as a service animal under ADA regulations. And your service animal must perform tasks” directly related” to your disability.
Seeing eye dogs almost always qualify as service animals. Animals that have been trained to do things like wake PTSD sufferers from nightmares also qualify. Other commonly recognized service animals include dogs that can warn people with epilepsy of coming attacks and canines that can detect low blood sugar in diabetics.
Some animals trained to deal with psychiatric diseases such as anxiety and depression also qualify as service animals. Keep in mind that emotional support creatures don’t qualify for the medical expense deduction as they aren’t defined as service animals under the ADA. If your pet hasn’t received training to “fulfill a specific task” related to your disability, they’re considered an emotional support animal, and you won’t be able to deduct their expenses, including medical costs and pet insurance premiums.
The IRS imposes a spending threshold with the medical expense deduction; your medical expenses must total at least 7.5% of your adjusted gross income to qualify. However, the IRS lets you count several types of medical expenses towards the total, including unreimbursed money you spend on things like glasses, prescriptions, acupuncture, and expenditures. You’ll need to itemize your return to receive the deduction.