I get deluged by questions at tax time, but the most common are about deductions. As in: “Can I deduct the cost of the suit or dress I have to buy for work, or my commuting costs, on my tax return?”
The answers are generally straightforward. But creative filers often try to push the limits.
One of my favorite stories, told to me by a tax professional, is about a filer who asked whether the service she used to cleanse her home of “bad spirits” could be deducted as a medical expense.
No, her ghostbusting was not a write-off.
And what about pets? Can you claim your cat or dog as a dependent?
I certainly understand the reasoning. My 10-pound Yorkshire terrier mix is like having another child, right down to expense of hiring a babysitter when my husband and I travel. And the vet bills? Oh my!
Well, the owner of an 8-year-old golden retriever is trying to test the idea of a doggy dependent in a lawsuit filed against the IRS last year in New York. Amanda Reynolds of New York wants the agency to recognize her dog, Finnegan Mary Reynolds, as a dependent — specifically, as a “quasi-citizen entitled to limited civil recognition, including dependency status for tax purposes.”
In the suit, Reynolds argues that the federal government should recognize Finnegan as a dependent because she provides the canine with “safe harbor, food, shelter, veterinary care, training, daycare, and boarding” — in total, expenses that run in excess of $5,000 a year.
“While dogs are considered property, there is a rational basis to consider them as non-human companions,” the lawsuit says. “For all intents and purposes, Finnegan is like a daughter. … While novel, this case is not frivolous or meritless and warrants serious consideration.”
There are particular rules to claim an individual as a dependent, and her argument broadly aligns with the guidelines for claiming a child: They live with you for more than half the year, with some exceptions, and receive more than half their financial support from you.
But the IRS says the tests to be a qualifying childspecifically say the child “must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, or stepsister, or a descendant of any of them.”
In other words, a person.
“Finnegan is categorically excluded from dependent status due solely to non-human classification,” Reynolds’s suit contends. “The categorical exclusion of dog-related support expenses constitutes a wrongful taking of property in the form of lost tax deductions and credits.”
James M. Wicks, the magistrate judge reviewing the case, didn’t dismiss it outright, issuing an order that Reynolds “presents a ‘novel but urgent question,’ namely, whether domestic companion animals, including Finnegan, should be recognized as a ‘dependent’ under the Internal Revenue Code.”
Still, the lawsuit, which is in early stages, is “likely to result in dismissal,” Wicks noted. The passion for a pet and treating it like family doesn’t change its status as property.
“The Tax Code simply does not allow for animals to be claimed as tax dependents,” he wrote. That said, certain pet-related expenses may be deductible, such as for service animals or guard dogs protecting a commercial property or warehouse, he added.
However wacky you might think this case is, it’s noteworthy because it taps into the frustration and bitterness many taxpayers feel about the inequities in the tax code. The tax code is supposed to be applied fairly, yet we frequently see the wealthy pay lessthan their fair share.
The rich often enjoy favorable tax treatment not available to middle- and lower-income taxpayers. Hedge funds and wealthy real estate investors use complex business setups to avoid paying billions in taxes.
Another example: Employees can no longer deduct home office expenses as a tax deduction to due to changes in President Donald Trump’s first major tax legislation, which took effect in 2018 and eliminated the deduction of unreimbursed employee business expenses. More broadly, the benefits of that measure skewed mainly to the wealthy, as did the tax legislation enacted last year, the so-called One Big Beautiful Bill.
In a scathing 2020 report, the New York Times said it had received tax documents showing that Trump paid only $750 in income taxes for 2016 and 2017, and no personal income taxes in 10 of the previous 15 years. It also found that he reportedly wrote off about $70,000 in styling services for his comb-over as a business expense during his time hosting on “The Apprentice” reality show.
While Trump could argue that his signature look was a necessary business expense as an entertainer, the claim highlights a significant gap in the tax experience of the ultra-wealthy. He certainly has the legal resources to defend the deduction if challenged. But most ordinary taxpayers do not. As F. Scott Fitzgerald famously observed in “The Rich Boy”: “Let me tell you about the very rich. They are different from you and me.”
The courts are bound to reject Reynolds’s claim, but the lawsuit is no more absurd than a tax code that allows a billionaire to pay less in income tax than a barista.
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