Many of you have already heard the story about the human who beat the IRS and was able to claim most of her expenses for rescuing and taking care of stray and feral cats for a rescue organization. This was a huge win for the rescue community, and validates all the hard work that so many of you do to help kitties in need. But my human, who is a stickler for details, wants me to make sure everyone knows what they can and cannot do, so that next year at tax time, you rescuers have everything that you need. (And Angel and Isabella’s human, if you want to chime in on this, please do! You work in this field an my human doesn’t.)
The basic story goes like this: back in 2004, a family lawyer and cat rescuer named Jan Van Dusen claimed a $12,068 deduction on her tax return for expenses incurred while fostering cats for a group called Fix Our Ferals. The IRS denied her deduction and claimed this was a personal expense, not a charitable one. But Van Dusen fought them, and in the end, won most — but not all — the deductions. I’ll itemize briefly so you can see what she did and did not do right.
- Van Dusen volunteered for a qualifying 501(c)3 charity. In fact she volunteered for several. How do you know if the group you volunteer for qualifies? Usually, they advertise this fact far and wide, announcing it on their website, Facebook page, and anywhere else they can. In addition they will have an ID number. You can also ask them.
- She kept some, but not all records. The Tax Court was able to look at Van Dusen’s credit card statements, veterinary records, checkbook register and other papers to itemize her expenses. It would have been even better if she had kept actual receipts and taken notes. Whenever my human has a deductible expense, she takes the receipt and writes the purpose for the expense on it. Or at least she tries to do that as often as she can remember!
- She did not get a letter from the rescue for expenses that were over $250, and this cost her! If you are spending a lot of money for any reason — like if a foster cat gets sick or you are taking care of a bunch of cats and are dropping a big wad of cash at the pet store or Costco — you need to get a letter from the charity acknowledging that this expense was for their benefit. Ideally you should get the letter right away, but in any case, you should have it before you file your tax return for that year.
- She was denied expenses that she could not prove were solely for the rescue cats benefit. These were things like Costco membership, a wet/dry vac, bar association dues and the like. Do any of these things look like they would directly go to help rescue cats, or is it more likely to help them indirectly, while helping yourself too? As a cat, I see this as a matter of common sense. Deduct items that help cats only. If it’s a gray area, or if it is clearly benefitting you as much as it is them, then don’t try to claim it as a deduction.
I hope this is helpful to you rescue humans out there! I want to see you save money at tax time so you are able to help more kitties! Now I have a surprise for you: comment below and tell me about your favorite small cat rescue — not a Humane Society or one of the big groups that throws huge donation events and has dozens of volunteers and a dedicated staff. I’m talking about a small rescue that only has a few people helping kitties, but has still managed to get their 501(c)3 status. My human will count up the ones mentioned in the comments up until 11:59 PM Pacific Time on the date of this post, June 14, and randomly pick one for a donation of $20. I told her that is what I am charging to write about taxes instead of something fun, like catching moths or watching Bird TV.