Tax Write-offs for Independent Practitioners Print
Modified on: Thu, 1 Feb, 2024 at 11:58 AM
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.
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.
Schedule C Form Link
Tax Deduction Categories for 2023
Additional Advertising and Marketing Costs: This includes business website expenses, business cards, print advertisem*nts, 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.
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FAQs
Key takeaways. Contractors and other self-employed workers can deduct home office expenses, advertising expenses, accounting fees, phone bills, equipment depreciation, travel and car expenses, healthcare and retirement contributions, and more from their taxable income.
Can you do tax write offs as an independent contractor? ›
Key takeaways. Contractors and other self-employed workers can deduct home office expenses, advertising expenses, accounting fees, phone bills, equipment depreciation, travel and car expenses, healthcare and retirement contributions, and more from their taxable income.
What can I write off as a 1099 physician? ›
15 Common Tax Deductions for the 1099 Physician
- Retirement Account Deductions.
- Home Office Deduction.
- Deductions for Cell Phone, Laptop, Office Supplies, Internet, and Other Business Supplies/Services.
- Deduction for Professional Service Fees.
- Travel Expenses and Meals Deductions.
- Vehicle Expenses Deduction.
16 amazing tax deductions for independent contractors
- Home office.
- Educational expenses.
- Depreciation of property and equipment.
- Car expenses.
- Business travel.
- Cell phone.
- Health insurance.
- Business insurance.
Yes. If you're self-employed, you may be eligible to deduct up to 100% of the premiums you pay for coverage. Let's say you pay $300 a month for health insurance out of your own pocket each year. You may be eligible to take an above-the-line deduction of $3,600 ($300 x 12 months) for that year.
How to get the biggest tax refund when self-employed? ›
To get the biggest tax refund possible as a self-employed (or even a partly self-employed) individual, take advantage of all the deductions you have available to you. You need to pay self-employment tax to cover the portion of Social Security and Medicare taxes normally paid for by a wage or salaried worker's employer.
Can an independent contractor write off clothing? ›
The Internal Revenue Service (IRS) allows certain individuals to write off work clothes as a business expense. You'll need to be self-employed to qualify, so if you consider yourself a sole proprietor, freelancer or gig worker, you fit this criteria.
How much money should I put back for taxes as an independent contractor? ›
1099 contractors should set aside 20-35% of their income to pay taxes. However, it's best to consult with an accountant as each case is unique.
How do 1099 contractors avoid taxes? ›
Six Tips to Avoid Paying Taxes on your 1099
- Set Up an Automatic Savings Plan for Taxes.
- Use a 1099 Tax Calculator to Estimate Taxes.
- Make Your Money Work for You with Micro-Investing.
- Create an Emergency Fund.
- Itemize Your Deductions.
- Employ a Tax Professional.
Can I still claim deductions without receipts? Yes, you can claim deductions even without receipts. Alternative records like canceled checks, bank statements, written records, calendar notations, and photographs are acceptable.
Independent contractors can claim tax deductions when they use cars for business-related reasons, like driving to meet a new client or attending a seminar. Commuting to and from work is never tax-deductible. The IRS sets a new standard mileage rate every year that you can record to figure out your deduction.
Can I deduct my meals if I am self-employed? ›
Share: If you're a sole proprietor, you can deduct ordinary and necessary business meals and entertainment expenses. However, these expenses must be directly related to or associated with your business. If you're an employee, you can deduct these only to the extent your employer doesn't reimburse you.
Can self-employed deduct dental expenses? ›
If you itemize your deductions for a taxable year on Schedule A (Form 1040), Itemized Deductions, you may be able to deduct the medical and dental expenses you paid for yourself, your spouse, and your dependents during the taxable year to the extent these expenses exceed 7.5% of your adjusted gross income for the year.
Can I write-off expenses if I get a 1099? ›
Yes, all self-employed individuals can write off business expenses. Self-employment includes 1099 contractors, freelancers, gig workers, and small business owners.
Will I get taxes back as an independent contractor? ›
Can you get a tax refund as an independent contractor? Yes—if you have overpaid your quarterly estimated taxes throughout the year, you may receive a tax refund after filing your annual tax return. It is important to note, however, that many independent contractors do not expect any tax return.
Can independent contractors write-off car payments? ›
It's natural for freelancers who use their cars to expect to claim a car tax write-off on their 1099 tax. But if you bought a car and are making monthly payments, or you're leasing a car, the payments are not actually tax-deductible.
Can a 1099 employee write-off meals? ›
The business meals deduction in 2024 allows 1099 workers to write off half of their meal costs. Most entertainment expenses are no longer tax-deductible.
