In a landmark tax court case, Jan Van Dusen emerged victorious against the IRS. Van Dusen claimed many tax deductions on her 2004 tax return, for all the expenditures she'd put out for the 70 (yes, you read that correctly) stray and feral cats she had fostered, as part of her volunteer work with Fix Our Ferals, a non-profit California charity.
Van Dusen claimed over $12,000 related to cat food, vet bills, garbage bags, and other items for her care of the cats. In 2009, a judge finally ruled that because her expenses were used toward a charitable organization, she was legally allowed to claim them. In fact, 90 percent of her vet bills, cleaning supplies, and food was tax deductible.
What does this mean for you?
If you've ever fostered an animal or know anyone who has, you're probably aware of the expenses associated with it. Beside just opening your heart and home to an unfamiliar animal, you also usually have to provide food, gas used to transport the animal to vet appointments or potential adopter meetings, and all the supplies that come with taking care of an animal.
"People have claimed these types of expenses before, thinking it makes sense because they're doing this service for a charitable organization, they should be able to recoup some of their out-of-pocket costs," said Rachel Hirschfeld, estate planner since 1999 and pet trust lawyer who created the Pet Protection Agreement found on LegalZoom.com. Hirschfeld was one of the first in the country to focus on pet trust laws for the security of pets' futures in cases where their owners might no longer be able to care for them.
Hirschfeld is thrilled with Van Dusen's victory. "There are so many people who want to foster and help animals, and this ruling will make it easier for everyone. More people will foster knowing it's a legal expense and this will help the whole community," she said. She suggested that a great next step would be tax deductions for people even after they've adopted the animals. "If you're adopting from a charitable organization or shelter, you're really helping out the shelter. The whole world would be a better place if people adopted more animals." (Side note: I adopted my foster dog, and would love to know I could claim her expenses! Wouldn't many of you feel the same way? I know I'm not alone as a "foster failure").
How to get the most money back
Hirschfeld has some tips for foster parents planning to claim deductions on their taxes.
- Collect and retain all your receipts associated with foster pet purchases
- Write a note on every receipt and be specific (ie if you go to a hardware store and buy cat litter or lights for the room the dogs are kept in, circle the items on the receipt and write a note about the purpose of the item)
- Remember that as of right now, the only tax-deductible purchases are for foster pets, not resident pets
"This is huge what's happened here!" said Hirschfeld, and encourages all pet foster parents to take advantage of this and share with all their animal networks to help raise the rate of fostering, and thus saving, animals in shelters across the country. "This shows that people are starting to really see animals as actual beings."
Ironically, Hirschfeld used to be terrified of animals. Now she tells the story of adopting her foster dog. "When you adopt an animal, it actually changes your heart."
NOTE: An approved charity is one that is recognized by the IRS with the 501(c)(3) designation as a Not-for-Profit organization.
Be sure to save all receipts, and if expenses add up to more than $250 for the year, a letter is required from the charitable organization that confirms your foster or volunteer status.