IRS faces a lawsuit that would reclassify pets as dependents

I'm joining the suit and also suing to allow my hound "Muffy" to deduct the office expenses and travel she incurs to run her grooming and social media marketing firm.

IRS faces a lawsuit that would reclassify pets as dependents

You pay all of their bills and ensure their well-being, but the Internal Revenue Service has thus-far said Fido and Fluffy aren't deductible

By Chris Morris, Quartz Media

Updated Monday 9:10 AM

Finnegan Mary Reynolds is suing the Internal Revenue Service. Normally, that wouldn't be headline news, since the IRS is sued a few times each day. Finnegan Mary Reynolds, however, is unique. Finnegan Mary Reynolds is a golden retriever.

Joining Finnegan in the suit is her owner, attorney Amanda Reynolds. Together, they're hoping to force the IRS to let pet owners declare their dogs, cats, and other household animals as legal dependents, which would carry some tax benefits.

The IRS defines pets as property. Reynolds, though, says they tick every box for a legal dependent under IRS rules: They have no independent income (we'll leave Lassie off this); they reside exclusively with their humans, and they have annual expenses that top $5,000. Calling them property, she argued, does not accurately reflect their role in a household.

“For all intents and purposes, Finnegan is like a daughter, and is definitely a ‘dependent’,” the case argues, adding that while it is certainly unusual, "this case is not frivolous or meritless." Not classifying all pets as dependents, Reynolds argues, is an unfair burden for taxpayers, especially since the IRS has decided that some dogs (service animals, specifically) can qualify for tax advantages.

While dog and cat owners are nodding their heads, tallying up the amount they've paid this year in vet bills, food, boarding, and more, the court doesn't seem real sympathetic to the case. Magistrate Judge James M. Wicks, who is overseeing the case in the Eastern District of New York, has granted a motion to pause the discovery process as the IRS is expected to file a motion to dismiss the case.