Pets these days are often considered as a member of a family. As people form stronger bonds with their fellow animals, owners cannot ignore the financial responsibility caused from nurturing their friend. This can be a burden for the owners since pets are solely dependent on the support that the owner provides, which is the same as raising a human child as a parent. The actual budgeted expense for the pet owners is as immense as the happiness and entertainment that they get from their pets.
According to the American Pet Products Manufacturers’ Association, Americans spent more than $62.75 billion on their pets in 2016. Considering more than half of American households have a pet, they spend an average of $1,560 a year on them. Association of International Certified Professional Accountants Americans report found one in three people have sacrificed their retirement account to pay for pet-related expenses, and one in four would miss paying a credit card bill to cover something for their pets. Due to high expenses that they have to endure, one of the common questions from pet owners is if they are allowed to claim pets as their dependents on their tax returns. It is not strictly restricted in IRS documents; however an entity should be a human being to be considered as a dependent. In governmental perspective, there is no need to offer tax benefits for creatures that do not pay taxes, and who brings extra enjoyment and entertainment to the human beings. Other than the special purpose animals such as service dogs or animals function as a business entity and incur financial profits, generally pets cannot be recognized as a dependent.
Furthermore, governmental organizations are attempting to levy taxes on pets as the government establishes different support control systems for companion animals. For instance, the South Korean government encountered severe backlash from the public as they introduce their future plans on establishing tax on possessing pets. Proposed by the Ministry of Agriculture, Food, and Rural Affairs (MAFA), the main purpose of introduction of the “pet tax” is to effectively raise funds for the protection of abandoned pets and improving animal welfare. The collected tax will mainly be used to maintain and operate shelters for abandoned animals and various facilities for animal welfare. According to ministry data, almost 121,000 of animals are getting abandoned in 2018 in Korea alone. This rapidly increasing number of abandoned animals, especially dogs, results in increasing costs incurred by local governments in handling the problem. However, the public is against the establishment of this tax laws since it will increase financial burden to the current pet owners which will lead to an increasing number of people abandoning pets in the end. Other supplementary laws such as pet registrations should be cooperated to effectively lower the rate of pet abandonments.
As pets become an important part of the modern day life of a people, consideration on establishing different approaches to successfully implement maintainable support systems for them is necessary.
Hoyeon Lee/Tax Advisors for Champaign Society (TACS)