Keeping track of your dog walking, boarding expenses for tax season
Dog walking, dog boarding and dogsitting are gig economy jobs that can make dog lovers astounded that they get paid for it. Who wouldn’t want to spend their days playing with four-legged, furry animals that are ecstatic to see them whenever they walk in the door? (Or not, depending on what’s going on in that dog’s life before you two were introduced.) You’re all set to make $20 here for a 30-minute walk, $30 here for an hour-long walk, and anywhere from $25 to $80 for dog boarding or dogsitting. What you may not be prepared for is paying self-employment taxes by year-end. Getting a handle on your expenses versus profits early on will save you a lot of time scrambling around for it on Payable, Stripe or whatever private platform you’re using.
The Internal Revenue Service confirms that taxpayers have to file an income tax return if your net earnings from self-employment were $400 or more. Even if your net earnings from self-employment were less than $400 that year, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 and 1040-SR instructions. And unless your income is like Michael Bloomberg, you can use Turbo Tax as an example of organizing your dog care expenses.
But too often, dog care workers just look at whatever they made in tips and flat rates and file that. Not enough attention is paid to other dog care expenses along the way. Here are some common ones that are too often overlooked as an independent contractor:
- Gas mileage: In 2020, the standard mileage rate is $0.575 for employees, self-employed individuals or other taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes. Whether you are walking all new dogs or have regular clients, take note of the mileage for meet-n-greets on dog app platforms (ex. Rover) and travel expenses for on-demand dog app platforms (ex. Wag). This may be tedious at first, but once you get regulars, it’ll just be a lot of copying and pasting. I highly recommend using Google Sheets to create a summary of driving expenses. If you know how to create formulas, you don’t have to manually do the math on mileage expenses or total profits.
- Food expenses: While claiming food expenses is arguably tax deductible for dog walkers who travel to and from residents in wide gaps (you can usually eat at home unless you’re doing back-to-back walks), it is important to keep track of food expenses while dogsitting. In this case, you are buying groceries, food delivery and instant meals while on the job.
- Dog supplies/treats: Depending on the company, you are allowed to use your own dog walking equipment (i.e. leash, harness, lead). Should the owner (or company) prefer that you use equipment solely offered by the owner, still keep track of other pet care supplies. This includes cleaning sprays (puppies and pad training), grooming tools, dog treats, dog food, dog bowls, dog toys, hand sanitizer and more. Although dog walking companies like Wag no longer give the $1 credit for wearing the dog walking T-shirt and/or bandana, if you have already purchased this equipment, this still falls under supplies and can be considered marketing for your dog walking rates.
- Maintenance expenses: If you are a regular dog boarder or hired to drop dogs off for grooming (if you’re not a professional dog groomer), chances are pretty high that you’re going to have some loads to wash and dry, and a few trips to a self-service car wash location to tackle all that leftover fur. You can either invest in a strong hand-held vacuum to keep your couches, bed and/or other furniture and car clean. Or, keep tabs on how much you spend to clean your living space and vehicle once the dog is gone.
- Dog care marketing supplies: In addition to company shirts and bandanas, business cards and website domain registration for advertising purposes are tax deductible. (If you use one domain for multiple reasons, you may only be eligible to claim this as an advertising expense for one gig.)
- Other eligible expenses: Talk to a tax specialist to see if your home and/or car is eligible for tax-deductible expenses. In certain circumstances, if a portion of your home (ex. garage or specified room) and/or car (ex. dog grooming van) is exclusively used for dog care needs, this may be eligible. However, you will more than likely have to prove that you are not using these rooms or vehicles for personal reasons, too.
Ideally you would have set self-employment funds to the side and are ready to pay as requested should you owe. Turbo Tax does offer a payment plan option if you do not have the bulk of self-employment taxes ahead of time. However, keep in mind that if you are a full-time freelancer/independent contractor, you can only use the installment plan option every five years. If you don’t make all payments on time, or you owe the IRS again during an installment plan, you will have defaulted on the agreement. It’s highly recommended to adjust withholding on your payments or setting aside estimated tax funds so you don’t have to scramble to pay it by April 15.