Tax Obligations for Dog Breeders
Yes, dog breeders must pay taxes on income from selling puppies. The IRS considers it a business. Expenses like food and vet bills can reduce taxable income. Breeders should report income, pay self-employment tax, and follow zoning rules. Small scale breeders may seem like a hobby, not a business.
Tax Deductions for Dog Breeders
When it comes to tax season, dog breeders can use deductions to minimize tax liability. Deductions help keep more hard-earned money. You may qualify for home office deduction if you have dedicated breeding space. This allows you to deduct part of housing expenses like rent and utilities. Other deductible expenses include dog food, grooming, kennels, and veterinary care.
Registering and Reporting
Filing Schedule C, all dog breeding income has self-employment tax plus income tax after expenses. Reporting all business expenses reduces taxable income. So register with tax authorities, declare income, and pay depending on profit. This is unless you have a hobby exempt from tax.
Licensing and Taxation
Breeding dogs solely for profit requires licensing. What percentage will be taxed? Social Security and Medicare taxes can be about 14.1% of profit. Add profit onto other income. See Schedule SE for details.
Deductible Expenses
You can only deduct service animal expenses. So write off costs of dogs guiding the blind, alerting the deaf, assisting mobility, protecting seizures. The IRS won’t deduct basic pet expenses.
Breeding for Profit
The average small scale breeder earns $40,375 annually. With top quality dogs bred yearly, high-end breeders can make $60,000 total from just four litters. But reputable breeders prioritize health over profits. They limit breeding to improve the breed.