2022 Year-End Checklist for Veterinary Hospitals

After years of record growth for many veterinary hospitals, 2022 was a year of leveling off. Most hospitals saw reduced growth and invoice counts due to high inflation, economic uncertainty, the “great resignation,” and lasting effects from the pandemic. Because these market changes can overshadow year-end planning, we have compiled this checklist to help you make the most of 2022.

Hospital Tax Planning

• If you need new equipment, purchase and place it in service by Dec. 31 in order to fully write off the cost in 2022. Remember that bonus depreciation starts to phase out beginning Jan. 1, 2023; 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.
• 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 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 2023.
• 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 2023, 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 2022 tax year. This could be beneficial and result in federal tax savings if you are located in one of the following states: Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Georgia, Idaho, Illinois, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, New Mexico, New Jersey, New York, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Virginia, and Wisconsin. Stay tuned in 2023 as additional states are implementing this tax.

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 2022 maximum for those under the age of 50 is $6,000.
  • The 2022 maximum for those over the age of 50 is $7,000.
• 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, 2022.
• 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. Happy holidays!