As counselors prepare for tax season, it can feel complicated. Often counselors tell themselves, “I'm just not a numbers person!” That's why I've interviewed counselor, practice owner, TMHCA President, and bookkeeping smart person Dr. Olivia Wedel to help make it as stress free as possible for you. Keep reading or listen to the podcast for ideas you can use today to get your books ready for tax season!
TCCBB #25 Dr. Olivia Wedel Helps Counselors Prepare for Tax Season
How much do you pay in taxes in private practice?
In general, the amount that someone in private practice pays in taxes depends on various factors, such as their income level, business structure, deductions, and tax laws in their jurisdiction.
Dr. Wedel talked about tons of write offs counselors can take that will actually lower the amount of taxes counselors have to pay. She also provided us with links to help estimate quarterly taxes, define 1099 versus w-2 designations and more.
The amount you should set aside for taxes in private practice can vary based on several factors, such as your income level, business structure, and location. A general guideline is to set aside 25-30% of your income for taxes, but this may not be accurate for everyone.
Grab Dr. Wedel's Power Point presentation here!
How do I stay organized for taxes?
This was the number one point Dr. Wedel emphasized during our interview. To reduce stress during tax time you MUST stay organized. Here are just a few of her tips:
- Keep detailed records: Keep track of all your business expenses, income, and receipts. You can use accounting software or create a spreadsheet to help you organize this information.
- Separate business and personal finances: It's essential to have separate bank accounts and credit cards for your business and personal finances. This makes it easier to track your business expenses and income accurately.
- Stay up-to-date on tax laws: Tax laws can change frequently, and it's important to stay informed and aware of any changes that may affect your tax obligations. Consider consulting with a licensed accountant or tax professional to keep you updated.
- Pay estimated taxes: If you're self-employed, you're required to pay estimated taxes throughout the year. Make sure you're aware of the deadlines and set aside enough money to cover your estimated tax payments.
- Hire a professional: Consider hiring a licensed accountant or tax professional to assist you in organizing your finances and preparing your taxes. They can help ensure that you're complying with all tax laws and regulations and help you minimize your tax liability.
What can you write off on taxes as a therapist?
As a therapist in private practice, there are several business expenses that you may be able to write off on your taxes, which can help reduce your taxable income and lower your overall tax liability. Here are some common business expenses that you may be able to write off:
- Office rent or mortgage payments
- Utilities, such as electricity and internet
- Office supplies, such as pens, paper, and printer ink
- Marketing and advertising expenses, such as website hosting fees or print ads
- Continuing education courses and professional development expenses
- Licensing fees and professional association dues
- Malpractice insurance premiums
- Business-related travel expenses, such as mileage or airfare
- Equipment purchases, such as computers or therapy tools
- Bookkeeping and accounting fees
It's important to keep accurate records and receipts of all your business expenses. So that throughout the year, so you can claim these deductions when you file your taxes.
There are professionals out there who can help counselors prepare for tax season. Of course the best advice is to get organized and start early, but it's not too late. Take the time to find the help you need so you're not stressed this time next year!
Blog post by Dr. Kate Walker Ph.D., LPC/LMFT Supervisor
Tag:accounting for mental health professionals, counseling practice, counseling practice finances, counseling practice profit, counseling private practice, managing money, mental health practice, mental health practice profit, mental health private practice, money management, private practice basics, self employed therapist tax deductions, tax write offs for therapists, taxes for private practice therapist