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Tax Deductions for Physicians

Written By: MB Group

The medical field is one of the most prestigious higher callings one can aspire to. Dedicating yourself to the best treatments for your clients has always been at the forefront of your practice, primarily if you work at your clinic. 

With complex pay structures and unique compensation methods , you want to maximize your financial well-being just as you optimize the remedies for your clients.

Join us as we explore some key deductions relevant to your future. We will uncover the secrets of operational, travel, and staff expenses and highlight the importance of working with a tax professional to enhance your knowledge and confidence in your financial future.

Operational Expensesphysician standing in front of door while wearing lab coat

Operational expenses relate to costs incurred during day-to-day operations and encompass total spending on your practice. Here are the most common operational expenses you may be eligible to claim when you file your tax returns and throughout the year:

1. Office Supplies and Equipment

Your equipment and office supplies set up the foundational structure of your practice. Post-its, pens, computers, and desks can be written off on your tax return. Even the chairs you purchased in the waiting room or your diagnostic room can be written off as an operational cost of doing business.

Generally, if you purchase something, ask yourself, "Will I use this for my staff or my patients while doing business?" If the answer is a resounding yes, this is a good indicator that you may be able to write it off.

2. Medical Equipment and Instruments

Of course, any office cannot run without the proper medical equipment that enhances or allows you to conduct your job correctly. Diagnostic tools, medical supplies, screening tools, and other instruments can be claimed on your tax returns. This is good news, as some of these devices are incredibly costly.

For more unique and expensive devices, you may be able to claim depreciation regularly to take advantage of further deductions.

3. Professional Memberships and Licenses

Depending on your associations, your professional dues are considered a cost of doing business. This does not necessarily stop at your physician's license but at any organization you are part of to network and contribute to the overall understanding of healthcare for humanity.

4. Continuing Medical Education (CME) Expenses

Learning never stops, as staying stagnant will make you lose relevance. As a physician, you are required to consistently refresh your license and understand the medical industry to comply with regulations and move your education forward.

Any courses, especially if recognized by the regulators, can be written off on your tax returns and claimed as a cost of doing business.

5. Malpractice Insurance Premiums

Insurance, especially malpractice insurance, can be costly. Regardless, they are necessary for you in your practice to protect yourself against specific claims. Some insurance may also be mandatory depending on where you live and do business.

The good news is that your insurance premiums can be claimed and deducted as a business expense, which can offset some of the costs.

physician standing in lab coat with stethoscopeRetirement Contributions

Whether self-employed or not, your retirement contributions are part of a comprehensive strategy that can help your financial well-being while maximizing your tax benefits. Various retirement plans, such as SEP-IRAs, defined benefits, and 401(k)s, can offer great advantages for your future.

If you own your private practice, offering retirement matching or contributions to your staff is a great way to remain competitive and retain top talent. Employee benefits and retirement contributions can also be included as expenses on your tax return.

Travel Expenses 

If you see most of your clients in person or remotely, you will conduct most of your business from a primary location. Travel expenses are a holistic deduction that can include any travel incurred for doing business.

This ranges from driving from your home to your office, attending conferences, and visiting more vulnerable patients in their own homes. Airfare, meals, lodging, gas, and transportation are deductible if directly linked to your practice.

Staff Costs 

Physicians with their practice cannot do everything themselves, especially if they have been growing. As a business owner, you can claim the same expenses as any other enterprise.

One of the major expenses is the cost of onboarding, training, educating, and keeping your staff. Educational costs, software that your administrators use, salaries, benefits, training, and payroll taxes are just some of the costs that can be deducted when filing your taxes.

When doing this, it's important to properly document and compartmentalize these costs so they are properly labeled and accessible in case they need to be referenced, reviewed, or audited later.

Why Physicians Should Work With a Tax Professional 

Filing your taxes can be daunting, especially if you rush to gather everything once a year to file on time. Deductions and fees as a whole must be tracked regularly and can be extremely time-consuming, especially when working with the demands of your patients.

Working with professionals like the MB group can help alleviate your time and better allocate your resources. With years of experience, our tax professionals are here to ensure that you are filing your taxes correctly and help you minimize your tax bill. 

Contact us today to take the first step toward saving time and money and achieving peace of mind so that you can focus on your patients.

Tags: Physicians

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