(68) Do Working Dogs Pay Taxes? Deductions for service dogs

Molly, the service dog

Golly, Miss Molly

A blog about a service dog and her veteran with PTSD

(Supporting the veteran and the family caregiver)


Tax Question:

Molly works, taking care of William. She eases his anxiety attacks and assists with balance. In exchange, she receives room and board, food, transportation, medical insurance, and love. Is she required to pay taxes?

Answer:

No. Service dogs are not required to pay taxes, however. . . 

Tax Breaks for Service Dogs

For 2014 taxes, the IRS issued Publication 502 for health and medical expenses. Service dogs are mentioned on the bottom left-hand column of page 8. Here is the excerpt from Publication 502: 

Guide Dog or Other Service Animal

You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities. In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the health and vitality of the service animal so that it may perform its duties. (Source: http://www.irs.gov/pub/irs-pdf/p502.pdf)

Even though dogs that assist handlers with PTSD are granted public access under ADA, these dogs are not included in the IRS deduction unless they provide support for a physical disability. For example, Miss Molly is trained to assist William with PTSD and with brace and balance to help support his physical condition; therefore, she qualifies for the deduction as a medical expense.

John J. Ensminger said in his book Service and Therapy Dogs in American Society that while federal law provides for deductions, benefits often flow through the state tax returns. States vary on the deductions so service dog owners should consult with their tax advisers for state tax benefits. (Ensminger, 234)

Other Financial Service Dog Benefits

Some states regulate service dog registration fees. In many cases, a handler/owner does not pay licensing fees upon proof of training. Miss Molly’s registration required proof of her service dog status and entitled us to a no-cost registration.

Ensminger stated that food stamp eligibility covers dog food and veterinarian bills for hearing and seeing eye dogs. The issue of coverage by dogs that assist with physical disabilities is unclear. (Ensminger, 236)

Individual states offer different benefits. For example, Washington welfare assistance includes food for a service animal. In New Mexico, public assistance long-term managed care covers service animals. Montana provides supplies and care for service animals under certain conditions. (Ensminger, 236-237)

 Greatest Tax-Free Benefit  Molly and William on sofa

Of course, the greatest benefit of all when considering a service animal is tax-free. Love and devotion flows directly from the service animal to the owner. . .and no tax is involved.

Post your Comments: 

What special benefits does your state or city offer for your service animal? Please comment below. 

Photo credits: pculbrethgraft

Source cited: Ensminger, John J. Service and Therapy Dogs in American Society. Springfield, IL: Charles C Thomas, 2010.

About the blogger 

Dr. Penelope “Penny” Culbreth-Graft is a retired city manager and graduate professor. She lives with her disabled Vietnam Veteran husband, William, and his service dog, Molly, on Cheyenne Mountain in Colorado. She writes, paints, cares for her husband, and spends time with her grandchildren.