If you spend day in and day out caring for the animals who come to you for help, you don’t have the time to waste researching all the ways you can save on taxes for the year. All you can do is hope that your bookkeeper categorized your expenses correctly so that your tax professional might have a chance at catching everything that can save you money on taxes.
Well, if your bookkeeper/accountant/tax pro does not understand the veterinary industry, how
can they know what will be relevant for you and your business? With a
specific focus for veterinary professionals, I have put together a detailed list
of both commonly missed and commonly used tax-deductible items for your
● Self-Employed Veterinarian – 2018 Tax Cuts and Jobs Act has
created the opportunity for veterinarians that report their business
income on their personal taxes to receive a pass-through deduction
on their taxes. Income limits apply.
● Merchant Fees – This deduction is commonly overlooked. Anything
from PayPal, Square / Stripe, Care Credit, Scratch Pay, etc. If you
pay fees for merchant services that help facilitate payments and
money movement between your business, bank, and customers, it is
● Malpractice Insurance – Insurance is a critical part of any business
but is especially important in the medical field. The payments you
make for malpractice insurance are completely deductible as they are
a necessary expense of doing business for potential legal situations.
● Employee Expenses – For small businesses, salaries, wages,
commissions, and bonuses are tax-deductible if they are ordinary and
necessary for business, a reasonable amount, for services provided,
and paid or incurred in the current year. Additionally, if you use a form
of an accountability plan (reimbursement or per diem) other expenses
can be whole or partially deductible when an employee incurs
expenses while working for the business. These include costs such
as meals, travel, education, and entertainment.
● Guard Animals – If you have a furry friend that lives at your practice
(whether that be at your home or separate office) and their primary
purpose is to deter intruders from your business. You can claim this
animal as a “necessary and ordinary” part of doing business and
deduct the expenses spent on their medical care.
● Depreciation – When you make any large capital investment for your
business whether its property or equipment (x-ray machines,
examination tables, etc.), be sure to create a depreciation chart and
deduct the depreciation expense.
● Ordinary Operational Expenses – Do not forget that the little things
add up! Make sure you claim everyday expenses including, but not
-Work clothing -Business Software -Internet and Utilities
-Facility Maintenance -Office Supplies -Medical Supplies/Equipment
-Patient Refunds -Administrative costs
● Retirement Savings – Do you contribute to an eligible 401(k) or other
these accounts every year up to a limit set by the IRS. For 2021, the
limit will remain at $19,500 with an additional “catch-up’ amount of
$6,500 for those over fifty.
● Licensing Fees – If you pay any licensing expenses for your business
to continue practicing or examination fees to keep your professional
credentials, this is listed as a deduction.
● Charitable Contributions – This can be a tricky area. Only if you
itemize for your taxes instead of taking the Standard IRS Deduction,
can you claim charitable contributions. However, itemizing may be
the way to go for your business especially if you do donate to many
● Subscription and Professional Fees – If you are serious about
continuing education and constantly growing your knowledge base for
your business, there are plenty of expenses you incur for access to
professional publications and collaboration with other veterinarians
via membership fees.
● Health Insurance Premiums – If you are a self-employed veterinarian
and pay for your own health insurance, you can deduct your
premiums paid from your income before taxes paid.
● Travel Expenses – If you often travel for your business (out-of-office
clinics, networking events, etc.) you can claim all these expenses as
● Service Animals – Does your practice train any animals to be used for
the support of a disabled individual? (Visual, hearing, physically
impaired). You can claim the medical expenses you have invested for
this animal! Do not forget… for IRS proof, obtain paperwork from a
medical professional or if you are simply the trainer, keep a training
log and test records.
1) Always consult your financial professionals for allowable amounts on
tax-deductible items. For example, if you have expenses such as
utility bills, vehicle repairs/maintenance, water, fuel, etc. in which part
of these are used for personal purposes rather than just business.
You must properly allocate the appropriate portion to your business.
2) Be sure to note the difference between tax-deductible items that are
“current expenses” and those that are “capitalized expenses.” Current
expenses can be claimed all in one year as their useful life is
expected to be less than a year. Capitalized expenses are those
whose useful life can be estimated to last longer than a year. These
capitalized expenses must be claimed over a period of years (usually
their useful life). Many rules and exceptions exist for capitalized
3) Don’t miss out! If you don’t save your receipts to prove where the money went, then you won’t be able to safely deduct these items on your taxes. Always keep adequate documentation for your tax pro to keep your records audit-proof!