Tax Deductions in Private Practice | Bookkeeping for Therapists

Tax Deductions in Private Practice | Bookkeeping for Therapists

FREE PDF: Tax-Deductible Expenses in Private Practice:
https://tinyurl.com/y7s63u9e

Form 1040 (Schedule C):
https://www.irs.gov/pub/irs-prior/f1040sc--2018.pdf

Instructions for Schedule C:
https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

Quickbooks:
https://quickbooks.intuit.com/

Info on deducting health insurance:
https://tinyurl.com/yc8knq35

We’re talking about tax-deductible expenses in private practice. No idea what I’m talking about? Don’t worry, we’re about to dive into it.

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This video is geared for therapists of all kinds, including psychologists, MFTs, LPCCs, social workers, and others in the clinical counseling field.

Welcome to Private Practice Skills! I’m Dr. Marie Fang, psychologist in private practice. I post videos offering tools I learned the hard way about starting and growing private practice so that you don’t have to.

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This video is not intended as professional or legal advice. Be sure to seek the services of a professional if you are in need of them.

when you run your own business, the IRS lets you deduct the majority of your expenses. This means that you get to subtract your deductions from your income, and primarily pay taxes on what’s left.

This is amazing!

Many of you are likely not aware of this benefit and are paying money to the IRS that you don’t owe them. Let me help you change that!

If you’re operating as a sole proprietor or a single-member LLC, you file a tax form called a Schedule C 1040. It looks like this and is not super complicated to complete. However, you’ll see here in Part II: Expenses that there’s a long list of items that you have to break down your deductions under.

In fact, it’s not too complicated. Let me break down some of the more common expenses, especially if you’re first starting out in private practice.
I created a handy-dandy PDF showing the expenses and what category to list them under. Feel free to click the link in the description to snag it for yourself. If you have any expenses not listed on the form, be sure to check with the IRS about deductions.

You might be wondering how the heck do you keep track of all of these expenses? Hopefully, you caught my earlier video about the advantages of having a separate checking account in private practice. I put all business related expenses on this separate account and keep all of my receipts. At the end of every month I run through every expense and categorize it in a Google Doc along with all of my profits. You can also pay for a program like Quickbooks to help you do this easily.

As I go through the year, I continue to tally all of my deductions and come tax time I know what my adjusted gross income is that I need to pay taxes on. Keep in mind that we owe our taxes quarterly in small business.

I hope this video helped you wrap your head around the idea of tax deductions in private practice. Feel free to print out the PDF for your own review. Until next time, from one therapist to another: I wish you well!

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