A Guide to Tax Deductions for Psychologists

Do you know which tax deductions for psychologists you’d qualify for?

It’s tax season. Are you prepared? Even if you’ve done the best bookkeeping throughout the year, preparing your statements, receipts, and other various paperwork for your accountant can take a lot of work. You want to make sure you’re taking advantage of all the tax deductions for psychologists, but you’re not sure where to start.

Seek help from a professional

Taxes are tough, which is why it’s important you hire a professional to guide you through the process. The Internal Revenue Service (IRS) instructions are difficult to understand, and tax laws change all the time. Accountants and certified tax professionals stay abreast of these changes. Just as you regularly attend counseling conferences to keep your license current and subscribe to psychology journals to read new research, accountants, and tax professionals also take measures to stay current in their field. Just as your clients put their trust into you, you should put your trust into a professional during tax season.

Preparation is essential

The best way to make sure you get as many tax deductions for psychologists as possible is to plan ahead. During the year, prioritize paying your quarterly taxes. There are no excuses for not filing or filing late. If you’re worried you’ll forget, set four alarms in your calendar right now that will alert you two weeks before the filing date. Better yet, make an administrative appointment in your schedule for those days, so you have time to pay the quarterly taxes immediately after the alarm goes off.

Close to the end of the year, touch base with your accountant or tax professional. At this point, you’ll have a clearer picture of your expected income for the year. Your tax advisor can use this information—along with many other factors—to help you determine how much you should spend before the year ends. Yes, you read that correctly. Some expenses will help you save money if you incur them before the year is over.

However, don’t rush into charging up your business credit card just yet. Your accountant or tax professional needs to be the person to help guide you through this decision. If they give you the go-ahead, consider hiring someone to bring your website back to life or book those conference tickets you’ve been putting off.

3 Popular tax deductions for psychologists you may qualify for

1. Home office

Do you see clients out of an office on your home property? If the answer to that question is yes, you may be eligible for a home office deduction. According to the IRS, the space must be the principal place of operations that gets regular and exclusive use for business.

2. Professional dues

If you’re a member of the American Psychological Association or other professional organizations, you can deduct the dues you pay on your business taxes.

3. Continuing education

Are you regularly attending conferences, workshops, or lectures? The cost of continuing your education to maintain licensure is generally deductible. (Your travel to these events may be included, too!) The same goes for any scholarly journals, professional magazines, or other reference materials to which you subscribe.

Additional tax deductions for psychologists

In addition to those common deductions, you may qualify for some of these common deductions, as well.

  1. Business and malpractice insurance
  2.  Business meals and entertainment
  3. Office equipment, supplies, postage, and furniture
  4. Legal and professional fees
  5. Bank and merchant credit card fees
  6. Office rent and even utilities
  7. Marketing needs, such as advertising
  8. Computers and associated software
  9. Mileage for business purposes
  10. The depreciation of other assets

Disclaimer: This shouldn’t be regarded as legal advice. We can’t recommend enough the importance of talking with an accountant or tax professional to help you make these decisions. They are the real pros, and taxes are too complicated to take guesses at. An audit is the last thing you want. Get your legal advice from someone who is trained and qualified to work one-on-one with you on all of the above.

We’re sorry that we can’t give you specific tax advice, but there is something SimplePractice can do for you. Actually, there’s a lot we can do for you. Need secure document storage? We can do that. Looking to implement an autopay feature? We’ve got that option. Maybe you just want to find a better system that will help you manage your billing and electronic claim filing—you know, the money coming in. Try us free for 30 days to see if SimplePractice is a fit for your private practice (Hint: we think it will be!)

Do you have any tax tips to share with the community? Let’s hear your thoughts in the comments below.


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