Pet Care Expenses as Tax Deductions – What the IRS May Consider

Posted October 16th, 2009 by petsitterkat

By: Dani Rougeau

If you own a pet, you may just be in luck in our current time of hardship. Congressman Thaddeus Cotter has introduced a new bill, House Resolution 3501 (HR 3501), known as the “HAPPY Act”, that will allow up to a $3,500 annual tax deduction for animal owners. This new tax break would be similar to that of a medical deduction on your annual tax return. This tax code amendment’s purpose is to help out with the costs associated with taking care of your pet.

On July 31, 2009, McCotter, a representative out of Michigan, proposed the HAPPY Act. HAPPY is an acronym for “Humanity and Pets Partnered through the Years.” The act was written based on research supplied by the American Pet Products Association’s National Pet Owners Survey. It has been referred to the House Committee on Ways and Means. The HAPPY Act would amend the current Internal Revenue Code in order to allow for up to the annual $3500 tax deduction to become available to pet owners. Although McCotter is not a pet owner, he wanted to help those families who do own pets be able to fully afford to take care of their pets, especially during our current tough economic time.

The goal of the HAPPY Act is to provide a tax break to pet owners. The tax deduction would be up to a maximum of $3,500, and would cover anything that has to do with taking care of your animals, including veterinary care. The only thing it will not cover is the cost for purchasing or obtaining your pet. A qualifying pet is any pet that is legally owned, domesticated, and is a live animal. Animals that are owned or utilized in conjunction with a trade or business, or that are used for research would not qualify for this tax credit.

So far, the Pet Industry Joint Advisory Council (PIJAC), who is a lobbying arm of the pet industry, is giving their full support of the HAPPY Act. They comment that this is a great first step toward making sure that pet owners give their pets the necessary care and the veterinary care that they need. They go on to state that it truly encourages responsible pet ownership, and hopefully, it will also reduce the abandonment of pets by those who are really struggling in our current state of economic downturn. The PIJAC issued a Pet Alert, announcing their support for the HAPPY Act on August 5, 2009.

There are other hopes for the HAPPY Act. There are many people who currently do not own a pet because they feel they would not be able to afford one. However, this new tax deduction offers an incentive for those people. Yes, owning a pet can get to be very expensive, but with this tax break, you can get some or all of that cost back at the end of the year.  Another hope is the fact that a lot of people feel they cannot afford to maintain a constant veterinary care for their pets. The HAPPY Act would allow for veterinary costs to be a deduction as well. So, in the end, hopefully more pets will receive the veterinary care that they need.

Unfortunately, it has been reported that during our current times, pet shelters are beginning to run out of room partly because of the fact that people are having a hard time taking care of their pets. Pet shelters are seeing a decrease in the amount of adoptions and unfortunately an increase in pets coming in. This really is not that big of a surprise seeing as more than sixty percent of households in the United States own some kind of pet.

This bill will cover any pet-related purchase, including veterinary services, grooming services, and other pet care service as well as medications, insurance premiums, pet supplies and other pet care related purchases.  This expense coverage by the bill would mean that the opportunity to maintain a healthy and proper care plan for a pet would be possible for any owner. Everything from vet visits or vaccines to flea control and pet sitting to day care and food and dog training and many other costly expenses would be covered under this bill. To the owner of the pet, this means they can afford to be responsible and help them help their pets live a long, healthy life.

Like any new bill or act trying to get passed in congress, there are the advantages of the bill, as well as the disadvantages of the bill. Some of the noted disadvantages include the fact that the act will end up giving a higher tax benefit to the wealthy. In an example provided, if you have a $1000 pet expense and you are in the 35% income tax bracket, you will be looking at  approximately a $350 reduction. If you are in the 10% income tax bracket, you will only be looking at an approximate $100 reduction in your taxes. Also, as all ready stated if the animal is used for research or is owned or utilized in conjunction with a trade of business, you will not be able to take advantage of the tax break. Also, if your animal has been claimed as a deduction under IRC sections 162 or 213 in any of the preceding three years, you would not be able to use your expenses as a tax deduction. One last disadvantage is the fact that the tax breaks will not be able to help you at the main time of need – when you actually need to dish out the money for vet care costs, or regular costs for the animal. Yes, you are going to be able to use your expenses as a deduction at tax time, but that does not quite help you the day you need to dish out $1,000 for an animal emergency.

There are several advantages to this bill, though, as well. Like all ready stated, because people will be able to use costs such as vet care as a deduction, people are more than likely going to be able to maintain a healthy vet care schedule with their animals. Another positive is the fact that this act may give hope to animal owners and give them the opportunity to be able to keep their pets, even when times are tough. Unfortunately, our current situation of recession has led to a noticeable increase in the number of pets entering shelters and unfortunately, a decrease in the number of pets being adopted. This bill may help to fix this current issue. However, you must keep in mind that the initial cost of adopting or obtaining your new pet is not going to be covered in this tax credit.

The public each has their own views and opinions on the HAPPY Act. Some are all for it, some are skeptical, and some just think it is the most ridiculous idea in the world. There does not seem to be a correlation between pet owners and non-pet owners. There are several blog posts regarding this act, and there have been several different comments made. Positive comments include those stating that it is about time that the United States proposes a bill like this – that other countries have had a tax break like this for a real long time, and it works great for them. For one blogger, they went on to state how they have six cats, and that one is on a special dietary food, while the others are on a more expensive, non-store brand type of cat food. She goes on to state that even though $3500 would not come close to her yearly costs, it would still be nice to be able to get some kind of tax break. Other supporters state how it is about time that there is a tax deduction for animal owners just as there are for families with children.

Those who are indecisive or undecided, they have questions that they would like to be answered. The HAPPY Act states that it would cover all expenses except for those in the purchase of the animal. Some make suggestions that there should be a pet insurance specifically for veterinary and emergency care for our pets instead of a tax break.

Some public arguments to the bill refer to those who cannot afford a pet, than those folks should

not have one, and that people should be more focused on other issues such as fixing unemployment rates. A counter argument to this was that a need for pet care expense may not make itself known until many years down the line and that many pet owners simply do not know how to prepare for this financially. Other against the bill state that the government should forget about a tax break to help pet owners, and just outlaw the breeding of pets to lower the pet population rate.

The HAPPY Act is currently trying to make its way through congress. There are several steps the bill has yet to go through to be able to become a tax credit available to pet owners. Currently, it has the support of the Pet Industry Joint Advisory Council, and many tax-paying pet owners. If you are a supporter and want to make your voice heard, there is currently a petition available for you to sign at http://www.thepetitionsite.com/takeaction/995438286. This would be the best way to make your opinion count for your support on the bill.

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One Response to “Pet Care Expenses as Tax Deductions – What the IRS May Consider”

  1. Anne Kostro

    I support this bill as a dog owner. I really don’t have many deduction and this would help. The expenses of dog ownership are numerous even for a healthy dog. There are vaccinations and yearly check-up to consider, also food, treats, dental care, grooming, and boarding. I would appreciate an update as to the passing of this bill.

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