Image source: Hakan Dahlstrom, Flickr
It’s that time of year again. Time to start pulling together our income and tax deductions to lay out in front of the IRS to see if we’re worth of a refund of a bit of that tax free loan we gladly give the government each year. In my world, my loan goes to maintain national parks, so I don’t mind.
Leanne L, a dog lover and follower of Keep the Tail Wagging, reminded me that foster families may be able to deduct the costs of fostering pets. Given the fact that the IRS has built a business out of confusing the rest of us, I thought I would do a little research, speak with a few CPAs, and gather clarification for all of us who foster.
When we fostered Morgan, I fell immediately in love and desperately wanted to be a foster failure. My boyfriend pointed out a few things that we couldn’t give Morgan that a new family could and he was right. It was amazing being part of the process to connect Morgan with the perfect pet parents. The money we spent was a pleasure, but if I can get some of it back, BONUS!
Our costs to foster a pet for 1 week
Food and Treats – the rescue group gave us food, but since we fed Morgan with our dogs, we fed him the same kibble we purchased regularly.
Clothing – Morgan was a Chihuahua mix, it was the beginning of spring and still cold so I purchased little sweaters and a coat for him for when we went to the park.
Fuel – for the trip to pick him up and the trip to take him to his new family.
In the end, the costs didn’t amount to much, because we only had Morgan for a week. The costs can be significantly more for families who foster for long stretches of time OR who are regular fosters (we only fostered twice), including…
- Fuel for trips to the vet, to meet families, and adoption events
- Pet supplies
If you foster a pet, can you deduct medical costs?
When we fostered Riley (who became our first and only foster failure), we incurred over $2,000 in medical costs. It’s been determined by the courts that costs “used toward a charitable organization” are deductible. But, of course, it’s not going to be THAT easy. These have to be costs that haven’t been reimbursed, aren’t part of a business, and were incurred while providing a service for a qualified, non profit organization.
Basically, our expenses will be considered non-reimbursable donations to the charity. Keep in mind that this may not fly in every situation and you must consult a CPA to make sure that your expenses are covered. Especially if you regularly foster a pet and have racked up a dump truck load of receipts. Because we ultimately adopted Riley and were reimbursed for $1,000; our medical costs aren’t deductible.
“Out-of-Pocket Expenses in Giving Services”
A CPA, who has chosen not to be quoted, shared this from the IRS tax code…
“Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. The amounts must be:
- Directly connected with the services,
- Expenses you had only because of the services you gave, and
- Not personal, living, or family expenses.”
Can we deduct adoption fees?
Nope! We cannot deduct adoption fees, because we’re receiving something in exchange (a pet) for the fee. We also can’t deduct the cost of rescue group gear. Last month, I purchased a t-shirt and a hoodie from Motley Zoo Animal Rescue, which is a 501(c)(3), WA based nonprofit corporation. These purchases are a personal expense, not a charitable donation.
What should pet families who foster a pet do?
- Make sure the rescue group you work with is truly non-profit, 501(c)(3)
- Keep your receipts organized
- Make notes on your receipts: pet name, rescue group, purpose of trip/supply/cost/etc
- Check with a local CPA to ensure that you’re covered
“The IRS does expect proper documentation of these expenses. Anyone involved in this activity should save receipts, cancelled checks, etc. to substantiate the donation. If the donations/unreimbursed expenses exceed $250, a letter must come from the 501(c)3 organization by the time the volunteer files their tax return. This letter must state the amount of the donation and the value of any goods or services received in exchange for that donation.” ~ Neil Johnson, CPA, Partner, The Dolins Group, Ltd.
I filed my taxes and only deducted the actual donations made to FurKidz 911 Connection and Motley Zoo Animal Rescue. In the future, I’ll keep receipts and track costs just in case it amounts to a better deduction. I hope this information helps you when you speak with your CPA about your annual return.
If you’ve learned anything else about the tax laws as related to pets and animal rescue, please share. We’re not experts, but these are things that we can bring up with our CPA.