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A 2020 Year-End Checklist for Veterinary Hospitals

December 7, 2020

Veterinary Services Group

With all of the twists and turns that have occurred in 2020, many veterinary hospital owners have found themselves stretched thin to keep up with busy appointment books and the demanding needs of managing a business. To help you stay as organized as possible, we’ve compiled this year-end checklist.

Hospital Tax Planning:

  • Purchase equipment (new or used) and place it in service by Dec. 31 in order to fully write off the cost of the equipment in 2020.
  • 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 what impact Paycheck Protection Program loan forgiveness, Small Business Administration debt relief payments, and other relief funds will have on taxable income for 2020. For more information on the tax implications of COVID-19 relief, visit the KSM COVID-19 Resource Center.
  • 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 greater-than-two percent owners of an S corporation
    • Disability insurance premiums paid on behalf of owners

Retirement Tax Planning:

  • Maximize your traditional and/or Roth IRA contributions.
    • The 2020 maximum for those under age 50 is $6,000.
    • The 2020 maximum for those over age 50 is $7,000.
      • 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 $13,500 $16,500
401(k) $19,500 $26,000
  • Maximize Health Savings Account (HSA) deferrals:
Maximum Contributions
Under Age 55 55 and Above
Individual Coverage $3,500 $4,550
Family Coverage $7,100 $8,100

Individual Tax Planning:

  • Make contributions to your 529 college savings plans.
  • Consider making any charitable contributions by Dec. 31. Consider gifting appreciated securities (held long-term) vs. cash. The donation you make and the deduction you get are greater than they would be if you were to sell the shares and donate the after-tax cash amount.
    • Please note that the Coronavirus Aid, Relief, and Economic Security (CARES) Act now allows taxpayers to take an above-the-line deduction for cash donations up to $300. This deduction is allowed even if the taxpayer does not itemize deductions on the 2020 tax return.
  • Submit for reimbursement any business expenses that were paid personally. These are no longer deductible on your personal tax return.
  • Discuss your tax projection with your CPA to understand the amount of tax payments that may be due in April.

Due to the passing of the CARES Act and other legislation throughout the year, there have been several law changes related to the 2020 tax year as well as some items that can be applied retroactively to prior tax years. As additional changes are currently ongoing, please be sure to contact your tax advisor to ensure that you are maximizing planning opportunities. Happy holidays!

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