[Editor's Note: This is a guest post from Jayson Mullin, a partner at a tax debt resolution company called Top Tax Defenders. We have no financial relationship.]
As with other professions, tax deductions for medical professionals must meet specific guidelines that have been set forth by the IRS. The deductions that you are allowed to take will depend on whether you are self-employed, an employee or both, and the expenses must be necessary for your profession. Here are some guidelines that will help you determine if you can deduct some of your job costs when you file your taxes.
In order for supplies to qualify as a deduction, they must be something that is ordinarily used in your profession and necessary for your job. If your employer reimburses you for the cost, then you cannot deduct it. Typical medical deductions may include your answering service, referral services, medical equipment, office supplies and your briefcase. If you buy something that costs more than $100, then keep it in a different list because it may be recovered separately.
Out of Town Expenses
If you have to travel out of town for your job, then your travel expenses can be deducted from your taxes. In order for this to qualify as a deduction, you must travel away from home, which is defined as the city in which you work. If you spend the night out of town, you can deduct mileage, food, lodging, valet services, phone calls and tips. If you drove to your destination, write down the business miles that you traveled. You must keep your lodging receipts in order to use them as a deduction, but you are not required to keep receipts for expenses that are less than $75. Just be sure that you write down how much you spent on your business trip, and keep lodging and meal expenses separate.
Vehicle Travel Expenses
While you cannot deduct the miles that you drive from your home to your office every day, you can include mileage from trips to temporary work sites. If you are driving to different locations for your job, you need to keep a detailed journal of your expenses. Your journal should include the date, the purpose of the trip, the place where you are going, the odometer readings when you leave and when you arrive, and the number of business miles that you have traveled. You should also keep the receipts for repairs, car insurance, gasoline and maintenance costs.
You cannot deduct the basic service costs of your primary telephone line. However, you can deduct toll calls if they are related to your business, as well as the costs of a second line that is used in your office for business calls. These may include your answering service fees, paging service costs and pay phone fees.
If your employer requires you to wear a uniform, you may be able to deduct its cost and upkeep from your taxes. In order for your uniform to qualify as a deduction, the IRS stipulates that it must be required by your employer and that it cannot be adapted to be worn as street wear. If a medical facility requires you to have an emblem, name or logo on your uniforms, then your uniforms may qualify as a deduction. You can also deduct your expenses for work shoes, dry cleaning and alterations.
Continuing Professional Education Expenses
If you take classes about your profession, then you may be able to deduct the expenses. When your employer requires you to take a class or go through training in order to keep your job, it is deductible. You can also deduct expenses when you earn continuing professional education credits in order to maintain your medical skills. However, you may not deduct expenses for training that is required in order to meet minimum requirements to get a new job. If you have taken classes, then you may be able to deduct the tuition, lab fees, copy fees, cost of supplies, textbooks and registration fees.
Certain professional fees and dues can be deducted from your taxes. If you are a member of a union, then your membership payments are deductible. You can also deduct any money that you place into a strike fund, but personal expenditures are not deductible. You can also include your membership dues and fees for professional associations.
You can also deduct your expenses from many other areas of your job. For example, you can include your malpractice insurance and liability insurance in your deductions, as well as any legal protection that you have. You can also deduct the costs of looking for a new job, such as hiring someone to update and edit your resume. You can even deduct the costs of medical journals and periodicals that you receive.
In addition to these deductions, there may be others that you can claim if you operate your medical business from your home office or if you perform services for non-profit organizations. Since there are many IRS laws about which expenses can be deducted from your taxes, your tax professional will be able to help you sort through them.
[Editor's Note: Keep in mind that if you are an employee instead of self-employed (partner or independent contractor) many of these deductions are subject to the 2% floor on Schedule A, which can often times eliminate any benefit to you. It's usually best to arrange to have your employer pay for things like CME if you're an employee.]
What do you think? Any other tax deductions unique to medical professionals that should be listed here? Comment below!