19 Tax Deductions for Physicians Who Own a Practice
By Jared Andreoli, CFP®, CSLP®
Operating a flourishing medical practice requires more than just medical proficiency; it also demands smart financial planning. For physicians who own their practice, navigating the intricacies of tax law is critical for maximizing profits and maintaining long-term financial stability.
Thankfully, the IRS tax guidelines for small businesses provide a number of tax deductions for physicians intended to lessen the financial strain.
The list below summarizes 19 key tax deductions for physicians.
Continuing Medical Education (CME): CME expenses that help physicians maintain or improve their professional skills (such as conferences, workshops, and courses) are generally deductible.
Professional licenses and certification: You can typically deduct expenses for professional licenses and certifications (e.g., state medical license renewal fees, board certifications, and DEA registration) since they are deemed essential expenses for maintaining a physician’s professional status.
Medical association memberships: Because membership dues to professional medical organizations are often regarded as necessary business expenses associated with their practice, physicians may be eligible to deduct these costs.
Work-related subscriptions and books: Physicians who own their practice may be able to deduct the cost of books and subscriptions, including medical journals and online subscriptions, as long as the expenses are directly related to their profession.
Scrubs and uniforms: If scrubs and uniforms are exclusively necessary for their profession and not appropriate for daily wear, physicians who own their practice can usually claim this cost as a business expense.
The cost of renting or leasing a clinic: As long as the clinic space is utilized exclusively for their medical practice, physicians who own their practice can deduct the entire cost of the rent or lease as a necessary business expense.
Malpractice insurance premiums: This deduction recognizes how important malpractice insurance is in shielding physicians and their practices from possible financial obligations.
Home office: If they meet certain IRS requirements for home office deductions, physicians who practice telemedicine or do administrative work from home can claim deductions for costs directly associated with using their home for business purposes. Examples include internet, utilities, and mortgage interest expenses.
Equipment and supplies: Physicians can lower their taxable income by deducting the cost of medical supplies and equipment that are required and used exclusively for their practice. This includes stethoscopes, otoscopes, lab coats, and other necessary tools.
Technology and software: Electronic health record (EHR) systems, medical apps, and telemedicine equipment are just a few examples of the technology and software costs physicians can deduct as necessary business expenses.
Mileage and travel: As long as they keep thorough records, physicians can write off mileage and travel costs related to attending conferences or commuting between clinics. This deduction acknowledges the costs related to required travel for professional development and practice management.
Contributions to pre-tax retirement savings plans: Physicians can reduce their tax burden by contributing to a tax-incentivized retirement account, such as 401(k)s, 403(b)s, 457 plans, cash balance plans, and tax-deductible contributions to regular IRAs.
Health savings account (HSA): Physicians can utilize triple tax incentives by contributing to an HSA, including tax-deductible donations, tax-free growth, and tax-free withdrawals on approved medical costs.
Student loan interest: Interest on student loans is another substantial tax deduction for physicians. They can reduce their taxable income by deducting interest paid on their student loans over the course of the year.
Depreciation of business assets: Physicians can progressively recoup the cost of business assets, such as office furniture or medical equipment, by deducting the depreciation over the items’ useful lives.
Charitable donations: Donating cash or equipment to approved charities (like medical missions) allows physicians to reduce their tax obligations and potentially claim a deduction for the fair market value of donated products. To verify the deduction and adhere to IRS regulations, careful documentation of these donations is required, including receipts and appraisals for bigger assets.
Professional fees: Professional fees paid to accountants, lawyers, and other consultants for services directly relevant to their medical practice can be written off by physicians as essential business expenditures.
Business travel expenses: Physicians may be eligible to deduct unreimbursed business travel expenses, such as airfare, hotel stays, and meals when they travel for work-related purposes (e.g., conferences, hospital visits, or continuing medical education).
Marketing and advertising: Website development, online advertisements, and printed materials are examples of marketing and advertising expenses that physicians who own their practice can claim as deductible business expenses.
We Can Help
When you’re ready to keep more of your hard-earned money and give less of it to Uncle Sam, reach out for help.
Simplicity Financial LLC provides experienced comprehensive wealth management and tax planning services to medical professionals.
Get started today by scheduling a free consultation, or reach out to us by emailing jared.andreoli@simplicityfinancialllc.com or calling 414-207-6473.
About Jared
Jared Andreoli, CFP®, CSLP®, is president and financial planner at Simplicity Financial, a fee-only RIA dedicated to helping early-career physicians conceptualize their financial picture and achieve their financial goals. Jared specializes in devising individualized financial road maps for clients, and he loves nothing more than a full day meeting with clients who value his partnership to solve problems—big and small.
After college, Jared spent six years working as a mutual fund administrator for a large company. While he learned an immense amount about the financial world, he was missing the personal connection of working with individual clients. Combining his passion for finance and personal connection, he established Simplicity Financial in 2017.
Jared has a degree in finance with a concentration in financial planning from Western Kentucky University, along with the CERTIFIED FINANCIAL PLANNER®, CFP® and a Certified Student Loan Planner (CSLP®) certifications. Outside of work Jared enjoys cooking and traveling. He played baseball in college and still coaches occasionally. He and his wife recently welcomed a daughter, who occupies most of their time. To learn more about Jared, connect with him on LinkedIn.