I cannot tell you how many times I’ve been jokingly (and sometimes not so jokingly) asked by a client if they could take a tax deduction for their dog; but, I can tell you that I can count on it coming up at least once every tax season. Of course, I smile and have a good laugh with my client as I tell them—no they cannot take a deduction for Fido. But, I just read about a case where a dog actually aided a taxpayer's defense in not paying New York $430,065 in income taxes. Yes, you read that correctly…it was the dog that saved the taxpayer from paying $430k!!! So how could this be?
Mr. Greg Blatt resided in a New York apartment. While still renting the apartment in New York he became the CEO at Match.com , a Dallas based entity. In 2009, Mr. Blatt signed a one-year lease for an apartment in Dallas. His employment contract listed his principal place of employment as Dallas, but he maintained his New York apartment. Mr. Blatt filed a New York nonresident/part-year resident tax return for 2009 and 2010. On audit, the New York taxing agency claimed that Mr. Blatt continued to be domiciled in New York and owed income tax of $430,065. A state court disagreed after evaluating the factors supporting Mr. Blatt's change in domicile to Texas, among the most important being his decision to move his dog to Texas. According to the court, the move of items that are "near and dear tend to demonstrate a person's intention" to change domicile. Gregory Blatt (N.Y. Division of Tax Appeals, No. 826504). (Adapted from: Thomson Reuters/PPC: Five-Minute Tax Brief)
While I would not chalk this up to getting a deduction for a dog, I think we can all agree, little Fido helped Mr. Blatt save $430,065 in taxes.