Reminder: Tax breaks for pet foster parents … make sure you claim yours!

Animal foster parents can now claim expenses for their foster pets!
Animal foster parents can now claim expenses for their foster pets!

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June 11, 2011
Animal lovers, rejoice!  In what’s being called a “great victory for animal rescuers nationwide,” an Oakland, Calif. “cat lady” battled the IRS, and won.  Jan Van Dusen emerged victorious from a tax-court trial over deductions related to the care she gave 70 stray and feral cats.  The ruling is being heralded as precedent-changing, not only for volunteers in animal rescue, but all volunteers who spend their money to do good.  Here, a brief guide to the case:

What exactly did Van Dusen do?
The 59-year-old former family-law lawyer, who lives alone in Oakland, Calif., volunteers for an IRS-approved charity called Fix Our Ferals.  As a volunteer, she provided foster care to some 70 feral cats, as well as housing seven cats of her own, much to the chagrin of some of her neighbors.

Why did the IRS take her to court?
On her 2004 tax return, Van Dusen tried to claim $12,068 in expenses related to her cat rescue work: Money she spent on cat food, vet bills, garbage bags, and paper towels, among other things.  The IRS said the expenses were personal, and not deductible.  In 2009, the case ended up in tax court.  Unfamiliar with tax law but unable to afford a lawyer, Van Dusen represented herself.   Judge Richard Morrison patiently went through Van Dusen’s receipts, and asked probing legal questions like, “What were these paper towels used for?”

What was the judge’s ruling?
In a 42-page decision released earlier this month, Judge Morrison (mostly) sided with Van Dusen, allowing most of her deductions, because the expenses were incurred helping a charitable organization achieve its mission.  In fact, 90 percent of her vet bills, cleaning supplies, and food was tax deductible.   Van Dusen’s total deduction was lessened somewhat — by an undisclosed amount — because she didn’t have a letter from Fix Our Ferals acknowledging her work (required for expenses of $250 or more).  The lesson here? “Get the letter. Get the letter. Get the letter,” says Laura Saunders in The Wall Street Journal.   “That should be the mantra of taxpayers who make charitable gifts of $250 or more.”

Do animal rescuers typically spend as much as Van Dusen?
It’s not uncommon.  The Humane Society says many of its volunteers spend as much as $2,000 a year to help needy animals, and some spend upwards of $15,000.

 

landmark tax court case

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.”

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.  K-9 Angels Rescue, Inc. is a designated 501(c)(3).

Be sure to save all receipts, and any single donation over $250 requires a written receipt with verbiage stating that no goods or services were exchanged for the donation.

Source

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