I've considered Claiming Your Pets As Dependents on your taxes. In fact, I figure it might eventually become the law. After all, whether your animals are rescues or expensive purebreds, you probably love them like a member of the family--which they are.
Yet even some well-meaning people can end up being accused of crossing the line into neglect or even abuse. That’s what’s happened to the nationally famous--in the tax world anyhow--Cat Lady. Oakland, California’s self-described Cat Lady Jan Van Dusen regularly cares for 60, 70 or more cats in her home. But more notable was that she took on the IRS and won.
She achieved a rare animal-lovers tax victory in U.S. Tax Court last year. In fact, her tax decision should embolden legions of other animal lovers doing their taxes. Van Dusen laid out over $10,000 caring for large numbers of cats in her 1,400 square foot home. Since she wasn’t reimbursed by anyone, she claimed the expenses on her taxes.
The IRS disallowed the expenses so Ms. Van Dusen went to court. Many tax professionals were surprised to find that the Tax Court disagreed with the IRS. The court upheld Van Dusen’s charitable contribution deductions for the cat care monies she laid out.
Although she also had seven personal pet cats, the Tax Court said 90 percent of her veterinary and pet supply expenses and 50 percent of her cleaning supply and utility expenses were for the foster cats. That meant she qualified for charitable contribution deductions. See Cat Lady Goes To Tax Court. Even though she was an unreimbursed volunteer, expenses incidental to her charitable work were ruled deductible.
Unfortunately, the Cat Lady’s latest news is considerably less happy. Officials charge that a majority of the Cat Lady’s cats were emaciated, have diarrhea, parasite infestations and more. There is apparently no legal limit on the number of cats she can have.
However, the alleged conditions in which cats were living were bad enough that some had to be euthanized. As for Van Dusen, she has been charged with one count of felony animal cruelty. See Oakland animal rescuer who won IRS case loses cats.
For more, see:
Stray Cat Strut: Woman Beats IRS
Cat lady beats IRS in victory for animal rescuers
'Cat Lady' Beats IRS In Court - MarketWatch Video
Can Your Pet Save You on Your Taxes?
Robert W. Wood practices law with Wood LLP, in San Francisco. The author of more than 30 books, including Taxation of Damage Awards & Settlement Payments (4th Ed. 2009, Tax Institute), he can be reached at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.
