Tuesday, January 27, 2015

Woof! Is My Service Dog Tax Deductible?

From my good friend, accountant and tax adviser, Traci McGowan.

A few of my tax clients are disabled persons. Some are able to work, most are not. All have an extreme number of medical expenses throughout the year they have to keep records of in order to continue to qualify for certain benefits in the cities/counties where they reside. While keeping track of all medical expenses can be a bit tedious, I’ve learned not everyone knows all those expenses could be deductible when it comes time to file taxes.

The IRS defines medical expenses as “the cost of diagnosis, cure, treatment, or prevention of disease, and the costs for treatment affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.”

So if you paid anything out of your pocket for medical expenses between January 1st and December 31st of last year, they are considered to be tax deductible (you can’t claim those items your insurance or some other agency/person paid on your behalf). This includes expenses incurred for those disabled persons who have a service dog.

Service dogs are amazing animals. For readers who don’t know, the American’s With Disabilities Act (ADA) defines service dogs as any dog that has been individually trained “to work or perform tasks for the benefit of an individual with a disability, including a physical, sensory, psychiatric, intellectual, or other mental disability.” And the IRS says “you can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or person with other physical disabilities. In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the health and vitality of the service animal so that it may perform its duties.”

It’s important to note two things. First: the service animal must be a dog. Any other type of animal trained or untrained are not considered service animals (although it’s really cool if your ferret can turn the lights on and off for you!). Second: the IRS does not go to great lengths to list out disabilities so you must make certain you are being treated by a medical practitioner. He/she will not only have a solid record of your disability, they can recommend whether or not your particular disability would benefit from a life aided by a service dog.

Many persons think a service dog is only for someone who is blind (i.e. guide dog), a disability can take on many forms from physical to emotional. If a person’s life is hindered on a day to day basis where they are unable to function normally, those persons may have a service dog. Some of those persons may have disabilities such as:

  • ·         Paralysis or other mobility limitations
  • ·         Blindness, deafness, and so forth
  • ·         Diabetes
  • ·         Multiple Sclerosis (MS)
  • ·         Cancer
  • ·         Autism
  • ·         Epilepsy
  • ·         Bone and/or skeletal issues (i.e osteoporosis)
  • ·         Wounded vet (armed service member)
  • ·         Post-Traumatic Stress Disorder

If you’re a disabled person who is under the care of a medical practitioner and you have a service dog, all of your expenses pertaining to the care and well-being of your service dog are tax deductible. I recommend you make sure your practitioner has sufficient documentation in your file to support your life with your service dog. Also, in the same manner you keep every medical receipt for your personal history, keep all of your receipts pertaining to the care and well-being of your service dog. It’s a lot of paper, but at the end of the year the documentation has the potential of maximizing your medical expense deduction when it comes time to file your taxes.

Traci McGowan is an accounting and tax professional living in the Metro Detroit area. When she’s not crunching numbers, she spends time with her brother (who’s a disabled adult) and her attention demanding cat-Tigger. 

Edited to add: Traci passed away unexpectedly a little over a year ago.  She is greatly missed.

1 comment:

  1. My firm has reposted your article on our Facebook page. We changed a couple of pronoun's to give Traci credit for the article. Please let me know if you have any questions or concerns.

    Nancy Duhaime
    Nathan Wechsler & Company (Concord, NH)