Can a mental health therapist deduct the cost of adopting a dog and training it to be a therapy dog for use in private practice? Is this a case when a partial deduction might make sense, or none at all?
For any business to deduct any business expense, the expense must be both ordinary in the course of the particular business claiming it and necessary. In this case, if the therapist can substantiate a business need for the therapy dog, which he or she should be able to do, all business costs associated with the therapy dog will be a deductible business expense to the practice. While that may sound like a simple task, therapy animals can have more than one use, and only those expenses necessary for and directly related to using the animal in the therapist's professional practice may be deducted. For example, if the dog is crated at the office when not in service, then this crate may qualify as a deductible business expense. However, if the same crate is used at the therapist's home, then the item is not a valid business expense.
Animal therapy has long been receiving favorable tax treatment, whether on the side of the end user deducting the cost as an individual medical expense itemized deduction or on the medical professional side as an allowed business deduction. However, due to the possible dual use of the animals and varying types of expenditures, it is highly recommended that you work with a professional with experience in this area. The PICPA has a handy CPA Locator on its website to help you find a professional in your area.
For more resources, check out PICPA’s Money & Life Tips or more Ask a CPA Q&As.
Answered by: Eric S. MacCollum, CPA, is a principal with Hudak and Company in Lemoyne, Pa.