Don't Mess With Taxes

This pup is just making sure he got all his presents! (Photo by freestocks.org)

In a couple of days, many families will welcome new members. No, I’m not talking about Christmas babies. I’m talking about Christmas fur babies.

A puppy, kitten, or other pet of any type or age can be a wonderful addition to a home, as long as everyone is on the same page.

Pros and cons of pets as presents: Many animal groups and veterinarians warn against giving a pet, especially as a surprise, during the holidays.

The holiday season already is stressful for many. Suddenly having a new dependent can add to that if everyone who will be — or is supposed to be — involved in the animal's life is not fully onboard.

So, if you're still considering a pet as a gift, Anderson Humane in Elgin, Illinois, has some do's and don'ts of giving pets as Christmas gifts.

Of course, if you already have a pet, by all means make sure it has a present (or two or three or …) under the tree.

And don't be embarrassed. Eighty-one percent of pet owners spend, sometimes a lot, on their animals' holiday gift(s).

Eighty-one percent of pet owners who participated in a recent Blueprint/USA TODAY survey said they planned to buy holiday or Christmas gifts for their dogs, cats, and other pets. Fifteen percent said they planned to spend $51 to $75 on their pets' holiday gifts, while another 11 percent said they'd spend $126 to $150. A few (6 percent) admitted to planning pet gift purchases of more than $1,000.

Beware pet scams: One definite pet don't during the holidays or any time of year is falling for a pet scam.

And with people seeking companionship during the holidays, it’s no surprise that scammers are jumping in to take advantage. The Better Business Bureau (BBB) has tracked pet swindles since 2017, when it issued an in-depth study Puppy Scams: How Fake Online Pet Sellers Steal from Unsuspecting Pet Buyers. Today, the BBB says that as many as 80 percent of online pet ads are fake.

That’s not really a surprise. It’s always been easy to find photos or adorable animals and build a website about them to lure in pet lovers. Things have gotten easier for crooks, and harder for wannabe pet parents, thanks to artificial intelligence (AI).

The operator of the fraudulent website posts about a new litter up for adoption. But the advertised pets usually aren't real. The real goal, however, is to steal either a potential pet purchaser's money, identity, or both.

Here are some other pet scam red flags from Michigan State University College of Law's Animal Law Legal Center:

• The pet seller has very specific communication rules. If the seller prefers to handle all correspondence via email, it is worth pushing for a phone call or video conference. The most ideal situation would be to meet in person.
• The site is in an unusual location. A vast number of these scams come from overseas. The overseas parties may explicitly state where they are located, such as looking to sell an English bulldog from England, or may hide their location. Check to see where the website is posted from or use available Google software to see the domain address.
• The seller has questionable payment requests. Like other online scams, fake pet sellers often request payment via unsecure wire transfers or gift cards, rather than personal check or through official banking channels.
• The pet's price is "great." A majority of scam pet postings create a too good to be true price point to lure in potential buyers who may not be able to afford the higher prices reputable breeders charge. If the price is significantly lower, or the only costs to the purchaser is certain shipping or other costs, that could be scam sign.
• Added costs add up. That seeming low pet price often is offset by unusual charges in place of an adoption fee. Thing that could signal a scam include extra shipping charges; a (not really) refundable deposit or, in rare cases of honesty, a non-refundable deposit; special travel crates and accessories; and insurance.

So be careful about using of pet adoption websites, during the holidays and year-round. Once crooks get your data, they can steal your money, your tax refund, and your complete identity.

Possible pet tax breaks: As mentioned earlier, most people with pets say just having the animals in their lives is all they need.

In some specific instances, however, a pet can provide a tax break. The two most common circumstances involve wither medical or business tax benefit.

When an animal serves a legitimate, physician diagnosed medical purpose, some of the pet’s costs could count in your overall itemized medical expenses. Note the physician reference. Animals that help you deal with a physical disability are more obvious and easier to claim tax breaks.

Internal Revenue Service Publication 502 says that if you need a guide dog, either to compensate for your reduced vision or hearing, you can include the costs of buying, training, and maintaining that animal in your overall deductible medical expenses tally. This generally includes such things as the animal's food, grooming and veterinary care to keep it healthy enough to help you.

Emotional support animals might qualify, too, but you need more than just your animal knowing when you need some extra snuggling after a tough day at work. A physician's diagnosis and recommendation are required.

Then there are situations when you have a working animal. This is, for example, a guard dog to keep your business safe after regular retail hours. That animal's work-related costs could be claimed as business deductions.

The tax code's standard business deduction rules still apply, notably that the animal's costs are ordinary and necessary in your line of business. Once you show that your pet is indeed helping your business succeed, then the money you spend — food, vet bills and training — are deductible as a business expense.

To do that, be sure to follow the cardinal tax rule of keeping good records. Track your animal's hours on the job, as well as all related work expenses. Also note that your guard dog will be treated as business property, meaning his or her value must be depreciated.

Finally, you have a better chance of not raising IRS eyebrows if you choose an animal that fits the job. So you probably shouldn't claim your Yorkshire Terrier is your warehouse's guard dog, even though she is overly protective of you and does yap all the time.

You can read more about potential pet tax benefits in my post 5 ways your pet might help cut your tax bill.

Of course, this time of year, you’re just thinking about how much you want that new furry family member. Just make sure you get the proper pet for your lifestyle and others with whom it will interact.

And if you’re not quite ready to bring home a new pet, you still can help by donating to your local pet adoption center so that the animals there get the care they need until they get new homes.

You also might find these items of interest:

• 7 tips to ensure your pets' safety during a disaster
• Heat wave tips for keeping yourself, pets & taxes cool
• Animal food banks can help with pets' Thanksgiving feasts

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