Deducting (and Loving) Emotional Support Animals

If you have an animal, whether it is a dog, a cat, or even a parrot — you know how important they are. They’re more than a pet, they’re a member of the family. They’re your secret-keeper, your best friend and so much more. And guess what? You can potentially write off their cost and care.

I have a lovable German Shepard named Chai and she means the world to me and my family. She also qualifies as an emotional support dog. As a result, I deducted her cost and I continue to deduct all the yearly costs associated with her training, travel, food and more.

But, taxpayers beware… not every furry friend qualifies for this type of deduction.

So, let’s be clear on what an emotional support animal really is.

According to the IRS, an animal can qualify as an emotional support animal if they can do any of the following:

  • Help prevent or interrupt impulsive or destructive behaviors
  • Sense anxiety attacks and take a specific action to support the owner
  • Calm a person down
  • Remind their owner to take prescribed medications

We often hear about support dogs, but many other pets can qualify as support animals, assuming they can fulfill the above IRS guidelines.

What conditions qualify for the use of a support animal?

By definition, a support animal must be used for the prevention or for the alleviation of a physical or mental defect or illness. See a list of support animals and qualifications here.

Now, you might be thinking you have to have a serious medical condition in order to have a support animal. This idea of a severe mental or physical defect may put many people on edge. However, consider what this really means. This isn’t saying something is severely wrong with you. Conditions like ADHD, anxiety, depression, PTSD, etc. all qualify as mental conditions that can be alleviated with the use of a support animal.

According to this Barna article, 42% of American’s have been to counseling and 1 in 5 Millennials are currently enrolled in ongoing therapy. This is enough to prove we all could use some form of emotional support to better our lives.

How can you deduct the expenses of a support animal?

There are many ways you can tap into tax benefits associated with having an emotional support animal. Here are the main three:

List their expenses as an itemized deduction. I often recommend steering clear of this one because it could raise a red flag. For example, if you purchase an expensive emotional support dog for $10,000 and this cost represents 25% of your total itemized deductions, you could catch some unwanted attention from the IRS.
Qualify for a Medical Expense Through Section 105. The great part about this option is you do not have to list what you purchased. Instead, it appears as a general “medical expense”.
Deduct the Costs From a Flexible Spending Account (FSA). This is only a viable option if you have a substantial amount of money in your FSA. Otherwise, it’s best to leave your FSA for other medical costs like copays and surgeries.

As with anything tax-related, you have to be quite meticulous and aware.

According to infoletter 2010-0129, the IRS states that, “the cost of buying, training and maintaining a service animal to assist an individual with a mental disability can qualify as a deductible medical care if the taxpayer can pass both ‘primarily for’ and the ‘but for’ tests.”

So, let’s take a look at what exactly these tests are and what documentation you need to have to meet this IRS guideline.

Get a written doctor’s diagnosis or prescription. This needs to outline that having a dog (or other animal) would help mitigate (not cure) the condition. If a doctor believes your condition will be improved then be sure this is clearly stated in your doctor’s note. This is what the IRS calls the “primarily for” rule.

Document the effectiveness of the dog for the condition. You want to paint a clear picture as to why and how the dog supports your mental and emotional health. This can be captured in something as simple as a Word document you keep updated and accessible in case it’s needed. Be sure to include any specialized training the dog has completed to qualify as an emotional support dog. Also, list what specific actions the dog can take to help alleviate your condition.

Show their reason for purchase is because of your condition. The IRS will not allow you to deduct the cost of just any animal you purchase. You have to show that you would not have incurred this expense if it weren’t for your condition. This means you would not have purchased the dog if you did not need it to aid in reducing your symptoms. This is referred to as the “but for” rule according to the IRS.

Something to always keep in mind is if you purchase the dog (or animal) before getting the diagnosis or doctor’s note, then you will not be able to deduct their costs. This is why it is crucial for you to understand and follow the rules in order to save BIG!