December is your last chance to reduce this year's tax bill. From retirement contributions to equipment purchases to expense prepayments, here's your 10-point action plan.
December is the most important tax planning month of the year. Once January 1 hits, most of your options for reducing this year's tax bill disappear.
Here's a 10-point checklist designed specifically for relief vets operating as independent contractors. Each item has a specific action, a deadline, and a dollar impact.
1. Review Your Estimated Tax Payments
Action: Pull up your Q1-Q3 estimated payments and compare to your projected total tax liability.
Why: If you've underpaid, you can make a catch-up payment before the Q4 deadline (January 15) to minimize or avoid the underpayment penalty.
How to check: Run your numbers through the IRS Form 1040-ES worksheet, or ask your CPA for a tax projection.
Safe harbor reminder: You avoid penalties entirely if your total estimated payments plus withholding equal at least:
100% of last year's tax liability (110% if your AGI exceeded $150,000)
OR 90% of this year's liability
Deadline: Q4 estimated payment due January 15
2. Maximize Retirement Contributions
Action: If you have a Solo 401(k), make your employee deferral before December 31.
Why: The employee deferral ($24,500 for 2026, or $32,500 if age 50+, or $35,750 if ages 60-63) directly reduces your taxable income.
Contribution
Tax Savings (25% bracket)
$24,500
$6,125
$32,500 (with catch-up)
$8,125
If you don't have a Solo 401(k) yet: You can still open one by December 31 and make the employee deferral. Don't miss this deadline — the employer contribution portion can wait until the tax filing deadline, but employee deferrals cannot.
If you missed December 31: Open a SEP-IRA before the tax filing deadline (April 15, or October 15 with extension) and make the employer-only contribution. You lose the employee deferral but still get up to 20% of net self-employment income.
Deadline: Employee deferrals by December 31; employer contributions by tax filing deadline
3. Prepay Deductible Expenses
Action: Pay the following expenses before December 31 to deduct them this year:
January health insurance premium
Next year's professional liability insurance renewal
State license renewal fees (if due in early next year)
CE course registrations for conferences in Q1
Professional association dues (AVMA, state VMA, Relief VMA)
Subscriptions (VIN, Plumb's, journals, software)
Why: As a cash-basis taxpayer, you deduct expenses in the year you pay them, not the year you use the service. Paying December 30 vs. January 2 shifts the deduction by an entire tax year.
Estimated impact: $2,000-$5,000 in additional deductions
4. Make Equipment Purchases
Action: Buy any equipment you've been planning to purchase before December 31.
What qualifies:
New stethoscope, ophthalmoscope, or other instruments
Laptop, tablet, or phone used for business
Office furniture for your home office
Scrubs and protective equipment
Software licenses
Why: The Section 179 deduction allows you to expense (deduct fully in the current year) equipment purchases up to $1,220,000 for 2026. For most relief vets, your equipment purchases will be well under this limit, so everything is fully deductible in year one.
Bonus depreciation (2026): 100% bonus depreciation was restored for assets placed in service after January 19, 2025.
Key rule: The equipment must be purchased AND placed in service (actually used) by December 31. Buying a laptop on December 30 and using it for shift scheduling on December 31 counts.
5. Verify Your Mileage Log
Action: Review your mileage tracking records for completeness and accuracy.
Check for:
Missing trips (compare your shift calendar to your mileage log — every shift should have corresponding mileage entries)
Beginning and ending odometer readings for the year
Business purpose noted for each trip
Personal miles excluded
Why: Mileage is likely your largest deduction ($10,000-$25,000). An incomplete log weakens your position in an audit.
If you've been sloppy: Reconstruct what you can using your shift calendar, Google Maps distance calculations, and any partial records. Going forward, use a mileage tracking app.
6. Assess Your Qualified Business Income (QBI) Position
Action: Calculate whether your taxable income is approaching the QBI deduction phase-out threshold.
Background: The Section 199A Qualified Business Income deduction allows self-employed individuals to deduct up to 20% of their qualified business income. However, veterinarians are classified as a Specified Service Trade or Business (SSTB), which means the deduction phases out at higher incomes.
2026 phase-out thresholds:
Single: $200,000-$250,000 (approximate)
Married filing jointly: $400,000-$450,000 (approximate)
Below the threshold: full 20% deduction Within the phase-out range: partial deduction Above the phase-out: no deduction
Strategy: If your taxable income is near the phase-out threshold, accelerating deductions (retirement contributions, prepaid expenses, equipment purchases) to push below it can be worth thousands.
Example: A single relief vet with $210,000 taxable income might lose the QBI deduction. But contributing $24,500 to a Solo 401(k) and prepaying $5,000 in expenses brings taxable income to $180,500 — fully below the phase-out. That restores approximately $36,100 in QBI deduction, saving roughly $8,000-$9,000 in taxes.
7. Consider Income Timing
Action: Decide whether to accelerate or defer income based on your projected tax bracket this year vs. next year.
Defer income if:
You expect to earn less next year (taking time off, reducing shifts, etc.)
You're above the QBI phase-out this year but expect to be below it next year
You have unusually high income this year
How to defer: Delay sending invoices for December shifts until January. As a cash-basis taxpayer, income is recognized when received, not when earned.
Accelerate income if:
You expect higher income next year
Tax rates are expected to increase next year
You want to maximize QBI deduction this year while you're under the threshold
How to accelerate: Invoice and collect payment for all outstanding work before December 31.
8. Organize Your Expense Records
Action: Review and categorize all business expenses for the year. Ensure you have documentation (receipts or bank/credit card statements) for every deduction.
IRS receipt rules:
Receipts required for expenses of $75 or more
Bank/credit card statements are sufficient for expenses under $75
Lodging always requires a receipt regardless of amount
Business purpose must be documented for meals and entertainment
Categories to verify:
Vehicle expenses / mileage
Insurance premiums (PLIT, health)
Licensing and registration fees
Continuing education
Professional dues
Home office expenses
Office supplies and equipment
Phone and internet (business percentage)
Meals (50% deductible for business travel)
Travel (lodging, airfare for CE conferences)
9. Review Your Business Entity Status
Action: Evaluate whether your current entity structure is optimal for next year.
Consider S-Corp election if:
Your net self-employment income consistently exceeds $80,000-$100,000
S-Corp election deadline: Form 2553 must be filed by March 15 for it to take effect for the current tax year. If you want S-Corp status for next year, start the conversation with your CPA now.
Consider forming an LLC if:
You're still a sole proprietor
You want liability protection
An LLC can be formed at any time — but do it before year end if you want it in place for January
10. Schedule Your CPA Meeting
Action: Book a tax planning meeting with your CPA before December 15 — not in April when they're overwhelmed.
What to bring:
Year-to-date income summary (1099s received, invoices sent)
Quarterly estimated tax payment records
Current mileage log totals
Summary of business expenses by category
Retirement contribution records
Health insurance premium records
Any major changes from last year (new state licenses, entity changes, etc.)
What to ask:
"Am I on track with my estimated payments?"
"Should I make any additional retirement contributions before December 31?"
"Is my income near the QBI deduction phase-out?"
"Should I consider S-Corp election for next year?"
"Are there any expenses I should prepay before year end?"
A one-hour year-end meeting with a CPA typically costs $200-$500 and can save you many times that in taxes.
The Timeline
Date
Action
Now
Review estimated payments, schedule CPA meeting
December 1-15
CPA meeting, evaluate entity structure for next year
December 15-25
Prepay expenses, make equipment purchases
December 26-31
Solo 401(k) employee deferral, finalize mileage log, organize records
January 15
Q4 estimated tax payment due
March 15
S-Corp election deadline (Form 2553) for next tax year
April 15
Tax filing deadline; SEP-IRA and Solo 401(k) employer contribution deadline
The Bottom Line
Year-end tax planning isn't about tricks or loopholes. It's about making sure you're claiming every deduction you're entitled to and timing your income and expenses optimally.
For a typical relief vet earning $120,000-$200,000, the moves on this checklist can save $5,000-$15,000 in taxes — money that stays in your pocket instead of going to the IRS.
Don't wait until April. The deadline that matters most is December 31.
Kal Saad