Tax Planning
Tax Deductible Business Related Expenses for Sole Proprietors
- Accounting and Tax Preparation Fees
- Board Fees and Board Review Courses
- Business Gifts (limited to $25 per gift per person)
- Cell Phone and Mobile Apps
- Cleaning/Laundry of Medical Uniforms
- Computers and Related Supplies
- Continuing Medical Education
- Conferences and Conventions
- Dues to Medical Associations
- Legal and Professional Fees
- Malpractice Insurance
- Medical Books and Journals
- Medical Equipment and Supplies
- Medical License and DEA Fees
- Medical Uniforms
- Telephone/Fax/Internet Access
- Auto Expenses
- Standard Mileage Rate - 58.5¢ per business mile for 2022
- Auto Lease Payments
- Car Washes & Detailing
- Gas & Oil
- Insurance
- Repairs & Maintenance
- Registration
- Tires
- Meals
- 50% Deductible when business related
- 50% Deductible when away on over-night travel
- Travel
- At least 24 hours away from home
- Transportation and lodging expenses related to business are 100% tax deductible
Student Loan Interest Deduction
- Individuals may deduct up to $2,500 of interest paid in the current year on student loans
- Student loan interest is deducted as an Adjustment to Income on Form 1040
- Voluntary interest payments are tax-deductible
- Limited to the first 60 months for which interest payments were required
- Phase-out (Adjusted Gross Income - AGI)
- Single Taxpayer $ 70,000 - $85,000
- Married Taxpayer $140,000 - $170,000
Itemized Deductions include:
- Medical and dental expenses (subject to 7.5% of AGI limitation)
- State and local taxes (capped at a combined $10,000 for income, sales, and property taxes)
- Home mortgage interest (up to $750,000 of mortgage debt incurred to buy or improve a first or second residence)
- Charitable contributions - cash and non-cash
Adjustments to Income include:
- Individual Retirement Account (IRA) contributions
- Student loan interest
- One-half self-employment tax
- Self-employed health insurance
- SEP IRA Contributions
Record Keeping
- Set up a filing system
- Consider using a designated credit card for only business related expenses. Request an annual summary statement each year.
- Digitize documents whenever possible, i.e. bank and investment statements, credit card statements, etc.
- Shred documents you don’t need
- Maintain financial records for seven years
- Maintain a mileage log or mobile app to keep track of moonlighting activities, business meals and travel, automobile mileage, etc.
- Meals and Entertainment - document business purpose and relationship of parties for all transactions
- Consider setting up a separate checking account for business purchases and expenses
Independent Contractor Status
- No taxes are withheld by employer
- Net income is subject to self-employment tax of 15.3%
- Contractor may be required to make quarterly estimated tax payments:
- 1st Quarter - April 15, 2022
- 2nd Quarter - June 15, 2022
- 3rd Quarter - September 15, 2022
- 4th Quarter - January 16, 2023
Coverdell Education Savings Accounts
- Maximum $2,000 per year contribution per child
- Contributions are not tax-deductible
- Account growth is tax-free
- Account must be used for higher education purposes by age 30
- Phase-out (Adjusted Gross Income - AGI)
- Single Taxpayer $ 95,000 - $110,000
- Married Taxpayer $190,000 - $220,000
Limitations and restrictions apply. Tax rules are subject to change. This is for informational purposes only. Individual situations will vary. Please speak with a qualified tax advisor for information specific to your situation.