2023 Year-End Checklist for Veterinary Hospitals

As veterinary hospital invoice counts flattened this year, efficiencies became extremely important for hospitals’ success. We encouraged veterinary hospitals to go “back to basics” for effective practice management, and much of the same will be important in the year ahead. Because we want you to focus on strengthening your business, our team has compiled this checklist of important year-end reminders.

Hospital Tax Planning

• If you need new equipment, purchase and place it in service by Dec. 31 in order to write off a portion or all of the cost in 2023. Bonus depreciation has begun to phase out this year; the maximum in 2023 will be 80% bonus depreciation instead of 100% bonus depreciation that was allowed previously. Section 179 depreciation will still be available. Please contact your KSM team member if you have any questions on whether the equipment or asset you are purchasing will qualify for Section 179 depreciation.
• Complete an annual review of your current fixed asset listing and remove any equipment that is not being used. This is especially important if you reside in a state where equipment is subject to personal property taxes.
• Complete a year-end physical inventory count.
• Review aged receivables/payables and determine if any should be written off.
• Review your reminder system and reach out to any clients who are missing appointments in order to get them in as soon as possible in 2024.
  • Consider implementing a payment plan or wellness plan for 2024, which can help improve patient compliance.
• Provide the following to your payroll provider (if applicable) for inclusion on W-2 forms:
  • Personal use of company-owned vehicles
  • Shareholder health insurance premiums paid on behalf of greater-than-two-percent owners of an S corporation
  • Disability insurance premiums paid on behalf of owners
• Set aside money in an account to plan for your tax bill. Even with slower growth, being prepared now will help you budget as we move into 2024, especially with high inflation and economic uncertainty.
• Reach out to your CPA regarding the new pass-through entity tax election that was enacted in many states for the 2023 tax year. This could be beneficial and result in federal tax savings if you are located in one of the following states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Mexico, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Virginia, West Virginia, and Wisconsin. Stay tuned in 2024 as additional states are implementing this tax.
• Beware of Employee Retention Credit (ERC) program advertising to veterinary hospitals. There has been targeted advertising claiming that veterinary hospitals could receive a potential credit of up to $26,000 per employee. However, the ads often fail to include the extremely specific eligibility requirements that most hospitals would not meet to receive this benefit. Also note the IRS has halted this program due to the volume of fraudulent claims.

Retirement Tax Planning

• Maximize your traditional and/or Roth IRA contributions. Note: There are income limitations related to Roth IRA contributions. Please contact your tax advisor with any questions.
  • The 2023 maximum for those under the age of 50 is $6,500.
  • The 2023 maximum for those over the age of 50 is $7,500.
• Maximize employee and/or spouse retirement plan deferrals:

• Maximize Health Savings Account (HSA) deferrals:

Individual Tax Planning

• Make contributions to your 529 college savings plan by Dec. 31, 2023.
• Consider making any charitable contributions by Dec. 31. Consider gifting appreciated securities (held long-term) versus cash. The donation you make and the deduction you get are greater than they would be if you were to sell shares and donate the after-tax cash amount.
• Submit for reimbursement all business expenses that were paid personally. These are no longer deductible on your personal return.
• Discuss your projected tax liability with your CPA to understand the amount of tax that may be due in April.

If you have additional questions, please be sure to reach out to your tax advisor or contact us to ensure that you are maximizing planning opportunities.