Tax Planning

Top 5 Tax Deductions Every Veterinarian Should Take

Top 5 Tax Deductions Every Veterinarian Should Take

The world of veterinary medicine is unique. Every day, vets and vet techs treat some of their clients’ most beloved family members – their pets! Working in this field is not just a job, but a passion. 

No matter how much they love the animals they care for, even the most passionate veterinarians still have to take a step back to deal with business matters from time to time, especially at tax time. 

One of the easiest ways for veterinary professionals to maximize their annual income is to take the right tax deductions. In this guide, you’ll discover the top 5 deductions every veterinarian should take every year. 

1. Small Business Pass-Through Deduction 

Small business owners, including many veterinarians, benefitted from the 2018 Tax Cuts and Jobs Act. In a recently updated article, the IRS notes that the pass-through deduction “also known as Section 199A, allows a deduction of up to 20% of qualified business income for owners of some businesses. Limits apply based on income and type of business.”

In 2021, business owners qualified for the full credit if their taxable income was no higher than $157,000 (or $315,000 if filing jointly). Taxpayers in 2021 were eligible for partial credit if they earned $207,500 (or $415,000 if filing jointly).

2. Operational Expenses

There are numerous operational expenses that all small business owners are allowed to deduct on their federal tax returns every year. Veterinary offices generally have dozens of these expenses over the course of any 12-month period, meaning that vets are often eligible for quite a few deductions. 

If you and your tax professional determine that you should itemize your operational expense deductions, you’ll be allowed to deduct things like:

  • Utilities and internet service for your vet office
  • Medical equipment for animal care (hypodermic needles, latex gloves, surgical instruments, medications, etc.)
  • Basic office supplies (printer paper, pens, notebooks, etc.)
  • Veterinary office software/customer relationship management software (CRM)
  • Any patient refunds 
  • Work clothes, including scrubs

3. Malpractice Insurance Premiums 

Just like doctors who treat humans, veterinarians can be subject to medical malpractice lawsuits if something goes awry with treating a client’s pet. Since malpractice insurance premiums are considered a cost of doing business as a vet, the monthly expense is tax deductible.

4. Travel costs

Again, much like physicians who care for people, veterinarians sometimes need to travel to professional conferences and seminars in order to learn about the latest advancements in veterinary medicine. 

Attending these types of conferences ultimately improves the quality of care that vets are able to provide at home. Your tax professional can help you understand exactly what deductions you can take related to work travel, but anything specifically associated with a business trip should be tax deductible. 

5. Depreciation

In certain circumstances, business owners can claim depreciation on property of significant value – this may include physical real estate, capital investments, or vehicles. 

The IRS explains that by claiming depreciation, you deduct the monetary value you’ve lost on that investment over time from your taxable income. As with anything tax-related, your tax professional can assist you with how to properly claim depreciation on your vet office or other business property. 

Did you know about all of these tax deductions for veterinarians?

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Julie Farless

Julie Farless

Martinez & Shanken, PLLC is a Certified Public Accountant (CPA) firm based in Gilbert, Arizona. We provide a full range of accounting, bookkeeping, consulting, outsourcing and business services, but we specialize in tax preparation. We work with you to ensure that your personal or business processes are conducted in a manner that ensures ongoing integrity in your financial transactions. We are available to answer your questions and help with your ongoing tax planning and changing business needs.

Deborah Martinez & Earl Shanken
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Arizona

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