Kitten season is over. But tax season (and tax deductions season) has just begun! Did you know that taxpayers can deduct some expenses related to fostering cats and dogs? In 2012, the United States Tax Court ruled that animal caregivers can deduct foster expenses, but there are a few important things to remember before you ask the IRS to write off all of your kibble and litter bills.
First of all, you have to work with a 501(c)(3) charity to claim a deduction for foster expenses. If you foster a stray that you find without working with a charitable organization, you will definitely rack up karma points, but the IRS won’t let you deduct a penny. So if you want to write off the cost of your fosters, make sure you are taking care of them at the request of a nonprofit organization that has received its tax-exempt determination from the federal government.
Basically, in order to claim a deduction, the expense has to be directly related to caring for foster animals. Examples include:
- Veterinary expenses
- Pet Supplies
- A portion of cleaning supplies if your cleaning expenses went up due to caring for foster pets
- A portion of utility bills if your utility bills went up due to foster pets
You can’t deduct expenses that you would have incurred anyway. So, for example, just because you have fosters in your home doesn’t mean you can deduct your rent or part of your mortgage payments.
Keep receipts and other records for your personal pets and foster pets separate. If possible, buy separate food, litter and other supplies for foster pets, so it is clear how much you spent on fosters rather than your own pets.
Record-keeping requirements for tax deductions can be complicated. They are even more complicated when a donation is in the form of unreimbursed expenses, rather than a direct contribution to a charitable organization. It’s a good idea to consult a tax professional for guidance before you start incurring expenses so you can get an idea of what paperwork is required for your deduction. Any expense over $250 requires even more record-keeping, possibly including a timely confirmation of the expense from the nonprofit organization you are working with. Again, you should consult your tax professional for more details about these requirements. You don’t want to miss out on your biggest tax deductions!
Fostering homeless pets is a great way to help animals in need and it’s also a great way to shave a few bucks off your tax bill. It’s something your kittens and your CPA can both love.
Obligatory Weasel-Word Disclaimer: Any accounting, business or tax advice contained in this post is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. You should consult a tax professional for advice on your specific circumstances.