Under certain circumstances, as a self-employed person, it is possible to make a tax deduction for the maintenance of a cat or cats. For the sake of complete clarity I will briefly go over when you might want to do this.
Self-employed people need to file a tax return to the IRS in America and to HMRC in the UK. This is normally done online nowadays. You have to work out how much tax you have to pay for the year and in broad terms you do that by deducting expenses from your gross income (revenue) and then paying tax on your net income. Clearly, self-employed people like to minimize the amount of tax they have to pay. They can help achieve this by maximizing their expenses. In fact, this is how big companies such as Google and Facebook reduce their taxes. They set up fancy schemes whereby they have to pay some semi-fictional company vast expenses which they then deduct from their gross income.
In respect of self-employed people in certain sectors of business it is possible to deduct from gross income the expenses of looking after a cat or cats. Clearly they have to be a necessary part of the business. You can’t just deduct the cost of feeding your cat at home if you are a writer working from home unless perhaps you have a plague of rats or mice persistently invading your workspace.
For example, if you run a family business selling car parts and you put down food to attract semi-feral cats with the intention of deterring snakes and rats then you can deduct the cost of cat food from your gross income. There is a case on that exact point and I discuss it on this website. You can access that page by clicking on this link.
You can see that in that instance there is a distinct connection between the business and feeding cats. The cats are being used for pest control purposes.
There are other instances where cats can be tax-deductible. If you have a hobby such as showing cats or perhaps breeding and showing cats, and there are a lot of hobby cat breeders in the USA, then quite naturally you can deduct cat maintenance expenses from gross income. You can expect to receive a 1099 form at the end of the year that you earn hobby income. Perhaps in practice many hobby earners don’t declare their business to avoid paying tax.
However, Micah Friam, a Certified Public Accountant (CPA) in the USA says that claiming these deductions is quite tricky. You might want to see an accountant initially to learn how it is done and then thereafter do-it-yourself. You have to itemize all the deductions which requires some self-discipline because a lot of people don’t do it. There are some restrictions on applying deductions. The deductions are subject to a threshold of 2% of your adjusted gross income (AGI).
There are very many volunteers involved in fostering cats in the USA and in the UK. For example, Cats Protection only operate with volunteers fostering their cats. Fraim says:
“Any expenses you incur caring for foster animals from a qualified nonprofit are deductible on Schedule A as charitable donations.”
Expenses going towards caring for the cats such as food and veterinary bills apply if the organization with which the foster carer is working does not provide food and veterinary services and they are 501(c)(3) charities. However, any expenses not covered and paid by the foster carer and not reimbursed by the charity are tax deductible. For example, if there is a need to travel specifically for the purposes of carrying out cat foster duties then the cost is tax-deductible at $.14 per mile.
There are quite a few cats who you could describe as service cats. There are therapy cats for example. The usual expenses of maintaining a therapy cat are tax deductible. It seems to me that there are two aspects to claiming expenses to reduce tax in respect of therapy cats. There are people who train and manage therapy cats to go into, for example, residential care homes where their therapy cat can assist people. Another example would be a person who is in some way disabled or who suffers from a mental illness and who looks after a therapy cat to alleviate that illness. If that person is self-employed then they can deduct from their income the cost of maintaining the therapy cat. They will need to obtain a prescription from their doctor demonstrating that the cat is a medical necessity.
In the instance of a person training and owning therapy cats, if they are charging out the cost to clients of their therapy cat service they can deduct expenses in maintaining that cat or cats.
Interestingly, in America, you can deduct costs with respect to transferring your cat to your new home. There are some qualifying criteria. The move to a new home must be “closely related to the start of your work”. The new workplace must be at least 50 miles further from your old home than your old workplace was. As an employee you have to work full-time for 39 weeks or more during the first year after you relocate to qualify for this deduction.
These rules are an outline. Of course, it is heavily advised that you at least on one occasion see an accountant to refine your knowledge of the rules and thereafter use them to complete subsequent tax returns. The point is, however, that self-employed people can deduct from gross income certain expenses relating to the maintenance of a cat under certain circumstances.
Source: Beverly Bird of GoBankingRates.com writing on Chicago Tribune and myself. For years I completed tax returns as a self-employed person.
