Are My Pets Deductible?

Family child care providers can deduct all “ordinary and necessary” expenses for their business. Ordinary and necessary means typical, helpful, appropriate or useful. Unfortunately, this does not include the costs associated with a dog or cat.

In over 35 years of helping providers who were audited by the IRS, I have never won a deduction for dog or cat food. The IRS considers these pets as too personal to be a business deduction.

You may have the children in your care play with your dogs and cats and you may only want to deduct a portion of expenses related to caring for them. No matter. The IRS, in my experience, won’t buy it.

I once helped with an audit where the provider paid to declaw her cat so she wouldn't harm the children. The auditor would not allow us to deduct this expense.

What pet costs may be deductible?

You could, however, deduct the cost of a dog leash or fence to keep your pet away from the children. Also, you could deduct the cost of pet shots but only if regular pet owners are not required to give their animals these shots.

What about deducting the cost of other pets such as fish, gerbils, birds, or turtles?

The answer depends on how you use these pets in your business. If you incorporate them into learning activities with the children, then you could deduct at least a portion of their cost. For example, you have a fish tank in the children’s playroom and you use the fish to teach children about colors, what fish eat, how fish breathe, etc. Because of these learning activities you could deduct the cost of the fish, fish tank, food, etc.

If your own family enjoys the fish, deduct the Time-Space Percentage of the cost. If your own family does not go into the playroom after day care hours, claim 100% of the cost. If the fish tank was in your own child’s bedroom and you did not make a point about teaching children about fish, then these costs would not be deductible.

I've seen providers who have farm animals such as goats, chickens, ducks, etc. that they incorporated into the curriculum of their program. I advised them to keep records showing what children learned from interacting with these animals (curriculum notes, photos, language in the contract informing parents of these activities, etc.).

How do you use animals in your business?

Tom Copeland – www.tomcopelandblog.com

For more information, see my book Family Child Care Record Keeping Guide.