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by Harry Rabb, C.P.A.
Special to Tropical Breeze
Even though he depends on your client for
all of her support, you are really asking for trouble if you try to
claim a pooch as a dependent. Nevertheless, love and loyalty may
not be all the benefits you can get from owning a dog — in
the right circumstances, they may be eligible for some dog-related
tax deductions as well.
It makes sense that the costs of buying,
training and maintaining a guide dog or other animal to assist a
visually-impaired or hearing-impaired person, or a person with
other physical disabilities, is a valid medical deduction. But most
people wouldn't guess that it's sometimes allowable to deduct
their pup's moving expenses! If you are moving for a job, the cost
of moving your personal belongings, including a dog, cat or other
pet, may be deductible.
What about those animals that provide a
real service to businesses? There is precedent for writing off pet
food when the animal in question is fending off unwanted rodents in
order to make a place of business safer for customers. And,
expenses relating to guard dogs have been successfully claimed as
deductions. Tax experts maintain that the IRS is more likely to
accept these claims if the dog is of one of those intimidating
breeds that is most successful in frightening off crooks and
vandals (no Chihuahuas need apply) and it's important that the dog
is guarding inventory, such as cars at a dealership. Not unlike
that home office that may allow you to deduct only a portion of
certain total home expenses, only expenses relating to the dog in
proportion to the total time he or she spends guarding the business
may be deducted. The purchase price of the dog itself may not be
deducted. However, in appropriate cases the value of the dog may be
depreciated over its expected lifespan as determined by a local
breeder.
What about animal adoption? The adoption
fee paid when adopting a dog from a rescue group, even one that is
recognized as a 501c non-profit entity, is not deductible.
Transactions in which you receive goods and services in exchange
for payment seldom are. But, if you throw in an extra donation
(i.e., above and beyond the price of obtaining the animal) to
support the good works of the rescue organization, this may well
qualify as a charitable contribution for which you could rightly
claim a tax deduction. Just be sure to get a donation
acknowledgement letter or other form of receipt proving that no
goods or services were provided in exchange for your donation.
Fans of the annual Westminster Dog Show
know that the "canine sport" business is flourishing. Show judges,
trainers and seminar presenters who provide training and education
to dog show champion wannabes are just a few of the professionals
in this industry who incur dog-related expenses that are legitimate
write-offs. Veterinary bills, dog show equipment and vehicles to
transport the competitors are all potentially deductible or
partially deductible expenses; but, just as no two dogs are exactly
alike, neither are two business income tax return situations. A
qualified tax professional will tell you that in each of the
scenarios described above, specific details must be considered to
determine whether or not the deductions are legit. Doggie
deductions aren't seen every day and could possibly trigger an IRS
audit.
Bottom line: to avoid winding up in the
dog house with the IRS, taxpayers are encouraged to make sure their
taxes are prepared by a licensed professional. Certified Public
Accountants are licensed by the State of Florida and must complete
stringent educational and annual continuing education requirements
— they stay on top of the constantly changing Tax Code. In
addition, they are qualified to represent their clients in front of
the IRS. Meet with a CPA after the tax filing season for advice on
moves you can make throughout the year to improve your tax
situation.
• • •
This information is provided as a public
service and should not be construed as individual accounting or tax
planning advice. For information on how these general principles
apply to your situation, please consult an accounting or tax
professional.
Harry Rabb is a C.P.A. and owner of
Accounting Services, Inc., 935 Main Street, Suite D-1, Safety
Harbor. Call 727-725-4121.
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