Tax season is upon us yet again, and as business owners, many therapists are often too busy to remember all of the expenses that were associated with running a psychotherapy practice last year. Whether your accounting system is an old shoebox filled with paid bills and receipts waiting for your accountant to organize, or whether you track all of your expenses and income with practice management or professional accounting software, the fact still remains that some business expenses usually end up being accidentally overlooked. Here are 9 tips to help you remember some of those easily forgotten expenses and maximize your business deductions:*
- Travel expenses related to continued education: When you travel for business or to earn continuing education units (CEUs), you can usually deduct most of the expenses related to your travel, including airfare, cabs, lodging, and the cost of the continuing education seminar, as well as 50% of your expenses for meals and business-related entertainment.
- Tax preparation services: Having an accountant or tax preparation service is an expense that helps your business achieve legal compliance, which also means it qualifies for a tax deduction.
- Fees associated with processing credit cards: No matter what credit card processor you use, make sure to maintain a record of the fees associated with a credit card processing service to add them as deductions.
- Bank fees: If you have a bank account or use a business credit card, you may have been charged usage fees, interest, check printing fees, or transaction fees along the way. The various fees charged by banks are business-related expenses that can add up to valuable deductions.
- Business gifts: Did you send out any holiday cards or gifts this year? Gifts to clients and employees can be deductible up to $25 per recipient per year.
- Buying meals for your staff: Managing a busy practice sometimes means you and your staff order in for lunch. If you picked up the occasional lunch tab, you just earned yourself another tax deduction, allowing you to deduct 50% of the actual cost.
- Home office deductions: Many therapists also have home offices that are used to catch up on after-hours administrative work. This area can be used to calculate a home office deduction. If your home office space is used strictly for business, you may be able to deduct a portion of your rent or mortgage, utilities, improvements, and other expenses related to this space. There are strict requirements on how this deduction is calculated and a tax official can help guide you to an appropriate deduction amount.
- Business calls from your personal phone: Most of your business is done on your business phone, but there are those times when you use your home phone to make business calls. Remember to store your home phone receipts away with your tax paperwork and highlight the business related calls to earn even more tax deductions.
- Software expenses: Business related software purchases made during this tax year and web-based software subscription fees may be fully tax deductible. As with any product purchase, make sure to gather the receipts associated with your software expenses. Practice Management Software = Tax Savings.
*Tax Advice Disclaimer: The information should not be used in any actual transaction without the advice and guidance of a professional Tax Advisor who is familiar with all the relevant facts. Although the information contained here is presented in good faith and believed to be correct, it is general in nature and is not intended as tax advice. Furthermore, the information contained herein may not be applicable to or suitable for each individual's or entity's specific circumstances or needs and may require consideration of other matters. Argonaut Software, LLC assumes no obligation to inform any person of any changes in the tax law or other factors that could affect the information contained herein.
Also in this issue: Do More with Client Self-Scheduling