13 tax deductions every doctor needs to know about.

You might be paying far more in taxes than you need or are even supposed to. If you’re not reporting all your tax-deductible expenses on your tax return, you’re likely leaving money on the table. This is especially true in the medical field when there are so many overhead costs that should be deducted from your taxable income. 

If you’re a self-employed physician or another medical professional, there are countless business-related tax deductions available for you to claim. If you’re an employee of a hospital or a smaller practice, there are still some high costs you should be reporting, but there aren’t quite as many. 

Top 13 Tax Deductions for Doctors 

Here are a few of the biggest tax deductions available for doctors: 

1. Retirement Contributions

The money you save for retirement with an IRA or a 401(k) is money you can deduct from your income and avoid higher taxes this year. The IRS sets IRA contribution limits each year, and you should aim to put away the maximum amount possible if you can afford it. 

Instead of deferring taxes with an IRA investment, you can pay the taxes upfront with a Roth IRA but use this to manage your tax burden in the future. 

2. Operating Expenses

Tax deductions for self-employed physicians are virtually unlimited for business-driven expenses like office equipment, computers and mobile phones, office supplies, and more. Internet and phone line costs can be deducted, and so can the costs of whatever computer programs you use to do your work or record patient data. 

Many costs go into running a business every day, so you should track and report all of those costs and ensure you claim every eligible expense. An accountant can help you be sure about what is deductible and what isn’t. 

3. Professional Dues and Licences

As a medical professional, you can’t practice medicine at all unless you’ve paid all the necessary licensing fees and organizational dues. Most of all of these expenses will be tax-deductible as well. 

This deduction includes board exam fees, medical license renewals, membership dues, and continuing education costs. Your ongoing work as a physician depends on staying informed and up-to-date on all the latest developments in your field. Therefore, any expense associated with professional development or education should be deductible. 

That applies to all educational costs, whether you were required to spend it or not. You can also deduct subscription costs related to any professional or technical publications.  

Keeping up with the ever-changing tax rules can feel more complicated than brain surgery.
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4. Continuing Education

Any costs related to maintaining or improving medical skills, such as seminars, courses, medical journals, or books, can be deducted from your tax liability as a doctor.

5. Health Care Premiums

If you’re self-employed and pay for your own health insurance, you can deduct your health care premiums as a business expense. That’s something your employer would likely pay for if you were self-employed, so it should be deducted from your personal income for tax purposes.  

You can also deduct your contributions to an HSA from your taxable income. If you have an HSA, try to save the maximum amount possible to protect that contribution from being taxed.

6. Work Space 

Do you rent an office or building solely for work use? If you do, all the building management and upkeep costs may be deductible. Keep track of your rent, utilities, and other office costs so that you can report them on your tax return. 

7. Home Office

If you use a part of your home exclusively for work-related administrative tasks, you may qualify for the home office deduction.

8. Travel and Meals

If you travel overnight for conferences, meetings, or patient care, you can deduct those expenses, including airfare, hotel, and 50% of meals. 

If you drive your own vehicle for work purposes, whether you’re going out of town or not, you can report the business mileage on your return. You can deduct those miles from your income according to the IRS standard mileage rates for the year.

9. Mortgage Interest

Don’t forget to consider your own home mortgage costs when preparing your tax return. You can still claim home mortgage interest as a tax deduction as well, and that can make a big difference. 

The precise maximum amount deductible depends on when you signed your mortgage, but whenever you signed, you should be able to deduct most or all of the interest you’ve paid on your home mortgage this year.  

10. Medical Equipment and Supplies

A doctor’s office requires much more expensive equipment and supplies than an average office. You often have to spend money on fresh medical supplies and state-of-the-art technology. 

Any equipment or supplies that are necessary for the work and care you provide can be claimed as a tax deduction. This includes everything from stethoscopes to bandages.

11. Staff Costs

If you have any employees working for you, their salaries and wages may be tax-deductible expenses as well. Even if it’s just an assistant or a receptionist, you may have significant business expenses throughout the year related to their wages or other costs related to their employment. 

12. Charitable Donations

Charitable contribution deductions can make a huge impact on your tax return. You can deduct qualifying contributions up to your total adjusted gross income for the year. 

This is a great opportunity to reduce your tax burden, and it’s effectively a chance for you to decide for yourself where your tax dollars go. Instead of paying into the general government treasury, you can channel your money directly to most of the causes you care about.  

13. Insurance Premiums

Malpractice insurance and other business-related insurance premiums are tax-deductible.

Get Advice From a Professional

Tax laws are complicated, and the rules for deductions seem to change every year. To really be sure you’re following the rules and maximizing your deductions, you can benefit from partnering with an accountant who's knowledgeable in the medical field. 

Our trusted tax professionals will review your finances and find every available deduction. We know how to maximize your after-tax income, properly report expenses, and keep your risk of an audit as low as possible. 

Preparing and filing your tax return doesn’t have to be an ordeal. However, you must keep track of business expenses and other possible deductions throughout the year. Effective bookkeeping early on will make everything easier later. Learn the best practices now to keep your finances as healthy as your satisfied patients. 

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.