In 2009 the Humanity and Pets Partnered Through the Years Act – more commonly known as the “Happy Act” was proposed. This law granted a $3,500 tax deduction for pets. While many people laughed, the Tax Court has apparently listened. Recent decisions rendered by the Tax Court has supported pet owners and animal carers everywhere and their right to deduct pet expenses from their taxes.

Animals as Charitable Deductions

The Tax Court recently overturned an IRS decision, supporting the rights of a taxpayer to take a charitable tax deduction on expenses spent on caring for feral cats for a nonprofit organization. This decision has opened the way for other taxpayers to take charitable deductions on pet expenses.

As it stands, the decision allows taxpayers to take a charitable-gift tax deduction for expenses directed toward the care of animals if, and only if, the expenses further the cause of the nonprofit. The organization in question must be a registered nonprofit with the IRS. Volunteers hoping to take such deductions must also have a written statement from the organization outlining their specific duties.

In addition, if you wish to pursue claiming such a deduction, you must maintain highly specific records. Each and every expense you wish to claim must be itemized and include appropriate documentation. At present nonprofit groups such as the Humane Society of the U.S. currently have plans to make use of this program. Continue reading →