For therapists in the United States, April 15th looms on the horizon like an unwanted surgery. It’s tax season and it’s time to get ready to pay your old Uncle Sam! The bad news is that you’re about to write a check for an unhealthy amount of money, the good news is that there are several tax deductions that can help.
While we love providing business advice for therapists, be sure to check with your accountant or another tax professional. Tax laws change (almost continuously) and even the Internal Revenue Service instructions can conflict with the law! (See this website for some wacky but true court rulings about IRS instructions.) So when in doubt about your therapy business taxes, do seek help!
The Home Office Deduction for Therapists
One of the best tax deductions for therapists is the home office. Many of you have a dedicated office outside of your home, however, if you’re primarily an online therapist, or if you have an office space for meeting clients in your home, then the home office deduction was meant for you!
Requirements to claim the home office deduction:
- Regular and Exclusive Use — You must regularly use part of your home exclusively for conducting business. If you have an extra room in your house that you use for your business, you can take the deduction for that extra room.
- Principal Place of Your Business — You need to demonstrate that you use your home as your main place of business. If you do business outside of your home, but you use your home substantially for your business, you should be able to take the home office deduction.
Usually, deductions for the home office are based on the percentage of your home devoted to business use. This means you can base the deduction on the square footage of the home office.
Deducting Therapy Practice Marketing Expenses
Every dime you spend on marketing your practice is fully deductible. Here are some examples of common therapist marketing expenses:
- Directory listings (i.e. Find a Therapist)
- Google Adwords
- Facebook Ads
- Business Cards
- Website expenses
- Seminars and Presentations (that you give or sponsor)
Therapist Professional Development
Professional development expenses are also deductible! Here are some examples of the kinds of expenses you can deduct:
- Professional memberships (APA, ACA, etc.)
- Industry publications
- Conference attendance fees
- Continuing education
- Online courses and certifications
- Consulting fees
Software and Technology Deductions
Buy a new computer? You could potentially deduct the cost, depending on your percentage of business use. One idea is to buy a computer specifically for your business use and then use an older computer as your personal computer. Then, you can deduct the full cost of a computer from your taxes.
You can also deduct other therapy business technology expenses such as:
- Your iCouch subscription
- Subscriptions to other software services
- Mobile phone expenses (based on a percentage of business use)
- Software packages such as MS Office
- Webcams (if you conduct online counseling for example)
There are dozens, if not hundreds of tax deductions for therapists — you just need to think to take them! Using tax software such as TurboTax makes this almost trivially easy. It’s highly recommended, especially since it walks you through the nuances of each deduction, making it almost impossible to make a mistake. We don’t have any connection to TurboTax — it’s just a great product that can simplify many of these tax-time questions.
Good luck this tax season! Did we miss any common deductions? Have a question? Please leave a comment!