Fame Comes At Price: What Having an Insta-Famous Pet Means For Your Taxes
A CPA weighs in on the deductions you can expect if your pet makes it big on social media
The dream of many pet parents is to turn their pooch or pussycat into a bonafide Instagram superstar. These folks might have dreams of their furry friend becoming the next JiffPom or Grumpy Cat.
And there is no reason not to dream, and post, and work your may to Instagram celebrity status. If your pet is open to a life of fame, and you want to share their cuteness with the world, nothing should hold you back — including your taxes.
Becoming a full-time manager to your photogenic pet comes with its own unique financial intricacies that you will need to know come tax season.
No need to worry, TurboTax CPA Lisa Greene-Lewis has the tips all aspiring Insta-famous pets and their owners need to know to make tax season as stress-free as possible.
Take a look at deductions, forms and reported income rules you can expect when your pet makes it big.
A fur-real career: If your fur baby is making money as an influencer, and generating income for you in the pet modeling/acting category, it could be viewed by the IRS as your own business. In some cases, pet related expenses could be offset against your pet’s earnings as long as the pet is generating income on a regular basis for its owner.
Dog by day, model by night: If you are not generating a regular income and your pet isn’t actively doing ongoing influencer activities, the IRS may look at your pet’s overnight stardom as a hobby. You would have to claim the income as hobby income, however you would no longer be able to deduct the hobby expenses, as hobby expenses that were deductible as miscellaneous itemized deductions prior to 2018 were eliminated following tax reform.
Free bones for Bow-Wow: If your pet is lucky enough to get their paws on free treats, trips and/or swag, the value of these gifts are considered income and must be reported on your taxes. Additionally, if your skateboarding kitty is sponsored and paid $600 or more per year to shred, you and your feline friend will most likely be issued a 1099-MISC at the end of the year. Don’t forget that while you will not receive a 1099-MISC for your kitty if he/she didn’t claw in $600 or more, you will still have to claim their income.
Deducting Gizmo’s glamour shots: If you’re paying for photo shoots, training, chow or grooming sessions for your pet influencer, these expenses paid are tax deductible as long as they are directly related to your business income.
Max’s (quarterly) taxes: If you are considered to have a business for your pet star and you think you will owe more than $1,000 at tax time, don’t forget to pay quarterly estimated tax payments by the deadline in order to avoid any penalties.
Paw-fessional help: Don’t worry about knowing all these tax laws – TurboTax Self-Employed will ask you simple questions about your pet’s puuurfect life in the spotlight and give you the business deductions you both deserve based on your answers. This software package’s industry-specific deduction feature can also uncover unique business deductions specific to your tax situation. And if you need any additional help, you can also connect live via one-way video to a live CPA or Enrolled Agent, with an average of 15 years experience, to get your tax questions answered. They can also review, sign, or file your tax return for you.