Does your pooch have more Instagram followers than you do, receive free doggy swag bags and seem to be all-around living his #bestlife?
If your furbaby is making money as an influencer, it could be viewed by the IRS as your own self-employed business if your pet is generating income for you in the dog modeling/acting category on a regular basis. In some cases, pet-related expenses could be considered business expenses and offset against your pet’s earnings.
However, if your pet isn’t actively doing ongoing influencer activities and you are not generating a regular income and profit, the IRS may look at your pet’s overnight stardom as your hobby. If this is the case, you would have to claim the income as hobby income, however, you would no longer be able to deduct the hobby expenses that were deductible as miscellaneous itemized deductions prior to 2018 since miscellaneous itemized deductions were eliminated under tax reform.
If Your Pup Gets His Paws on Swag
If your dog is lucky enough to receive free doggie 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 may not receive a 1099-Misc for your kitty if he/she didn’t claw in $600 or more, you will still have to claim the income when you file.
If you’re paying for photo shoots, training, chow or grooming sessions for your pet influencer, these expenses are likely tax-deductible if they are directly related to your business income.
Paying Quarterly Estimated 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 quarterly deadlines in order to avoid any penalties.
Don’t worry about knowing all these tax laws — TurboTax Self-Employed will ask you simple questions about your pet’s life in the spotlight and give you the business deductions that you deserve based on your unique tax situation. TurboTax Self-Employed industry-specific deduction feature can also uncover unique business deductions specific to your tax situation.
And if you need any additional help, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average 15 years experience to get your tax questions answered. A TurboTax Live CPA or Enrolled Agent can even review, sign and file your tax return for you and they are available in English and Spanish.