Taxes can be complex, especially when managing a private practice. It's crucial to stay organized and recognize the personal investments made in your business.
Please Note: This information is to guide you and should not replace professional advice. Always consult with your accountant for specific tax questions and to ensure you're aware of all eligible write-offs.
What are Tax Deductions?
When operating a business, such as a private practice, you can deduct business-related expenses from your income. This lowers your taxable income, as you're taxed on your net income after expenses. These expenses include fees for services like Help Therapy, covering marketing, billing, and administrative costs. Consult with your accountant to categorize these expenses correctly (e.g., professional services, advertising).
Important: You will not receive a 1099 form from Help Therapy.
Documenting Tax Deductions
For sole proprietors or single-member LLCs, use the Schedule C (Form 1040) for filing taxes. This form will include all applicable deductions.
Tax Deduction Categories for 2023
Additional Advertising and Marketing Costs: This includes business website expenses, business cards, print advertisements, and fees for listing on psychology websites.
Business Meals: Deduct meals for business meetings with coworkers or consultants.
Vehicle for Business Use: Deduct business-related mileage and vehicle upkeep. Track your miles diligently. For 2023, the IRS standard mileage rate is $0.58 per mile. Alternatively, you can calculate actual vehicle expenses proportionate to business use.
Membership Fees: Professional organization memberships, like the APA, are deductible.
Continuing Education: Costs for courses, workshops, and conferences required for CE credits are deductible.
Office Expenses and Supplies: Deduct expenses for maintaining your office or telehealth workspace, including small items like pens and cleaning supplies.
Software Services: Deduct subscription costs for telehealth platforms, EHR platforms, and other software services.
Office Rent and Utilities: Deduct office rent and utilities. If working from home, a portion of your home expenses may be deductible. Home Office Deduction Guide.
Business Registration and License Fees: Initial and renewal costs for business registration and licenses are deductible.
Travel Expenses: Deduct business-related travel costs, including airfare, lodging, car rentals, meals (up to a limit), and other related expenses. Business Travel Deduction Guide.
Personal Psychotherapy: Costs for personal therapy sessions can be deducted, as it contributes to professional growth.
Depreciation Expenses: For items over $2,500, like a $3,000 laptop, opt to write off the full cost in the first year or depreciate over several years.
Insurance: Deduct liability and malpractice insurance costs.
Legal and Professional Fees: Deduct fees for accountants, bookkeepers, lawyers, etc.
Remember, tax laws and rates can change, so it's essential to consult with a tax professional for the most current advice and to ensure you are fully compliant with IRS regulations.