As the year draws to a close, business items can easily get lost in the flurry of holiday activities. That is why we created this year-end checklist – to help you make the most of 2018 and to help keep your business as healthy as it can be.
Hospital Tax Planning:
- Purchase any needed equipment (new or used) and place it in service by Dec. 31 in order to fully write off the cost of the equipment in 2018.
- Review the current fixed asset listing and remove any equipment that has been disposed or abandoned. This is particularly important if you reside in a state where equipment is subject to personal property tax.
- Consider separating meals and entertainment transactions into multiple accounts based on tax deductibility as established by tax reform.
| Meals & Entertainment | ||
| Prior Law | New Law | |
| Meals furnished to employees | 100% deductible | 50% deductible |
| Client business meals | 50% deductible | 50% deductible |
| Entertainment expenses for the benefit of employees (i.e., holiday party) | 100% deductible | 100% deductible |
| Entertainment expenses | 50% deductible | Non-deductible |
- Complete the year-end physical inventory count.
- Review aged receivables and determine if any amounts should be written off.
- Provide the following items to your payroll provider (if applicable) for inclusion
on W-2 forms:- Personal use of company-owned automobiles
- Shareholder health insurance premiums paid on behalf of a greater-than-two-percent owner of an S corporation
- Disability insurance premiums paid on behalf of owners
Retirement Tax Planning:
- Maximize your traditional and/or Roth IRA contributions.
- The 2018 maximum for those under age 50 is $5,500.
- The 2018 maximum for those over age 50 is $6,500.
- Please note that there are income limitations related to Roth IRA contributions. Please contact your tax advisor with any questions.
- Maximize employee and/or spouse retirement plan deferrals.
| Maximum Contributions | ||
| Under Age 50 | 50 and Above | |
| Simple IRA | $12,500 | $15,500 |
| 401(k) | $18,500 | $24,500 |
- Maximize Health Savings Account (HSA) deferrals.
| Maximum Contributions | ||
| Under Age 55 | 55 and Above | |
| Individual Coverage | $3,450 | $4,450 |
| Family Coverage | $6,900 | $7,900 |
Individual Tax Planning:
- Make contributions to your 529 college savings plan.
- Consider making any charitable contributions by Dec. 31.
- Submit for reimbursement any business expenses that were paid personally. These are no longer deductible on your personal return.
- Discuss your tax projection with your CPA to understand the amount of tax payments that may be due in April.
As further guidance on the Tax Cuts and Jobs Act (TCJA) provisions is released, it could have an impact on both your hospital and personal tax returns. Please be sure to contact your tax advisor to ensure you are maximizing opportunities and remaining compliant. Happy Holidays!
About the Author
Terry O’Neil is the partner-in-charge of KSM's Veterinary Services Group. Terry helps veterinary hospitals grow by providing them business, financial, and tax advice. Connect with him on LinkedIn.
About the Author
Beth Scott is a director in KSM’s Veterinary Services Group. From financial statement analysis to key performance indicator reports, Beth works with clients to provide actionable solutions to their complex business challenges. Connect with her on LinkedIn.
About the Author
Ali Todd is a director in the KSM’s Veterinary Services Groups. Ali works closely with clients to understand their challenges and provide practical solutions, whether it is tax planning or creating an action plan for enhancing profits.
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