Individual C-Corps Gaining Traction

In today’s rapidly evolving healthcare landscape, doctors are not only seen as medical professionals but also as entrepreneurs. Many doctors are now considering establishing themselves as individual C-Corps to take advantage of the numerous benefits this business structure offers. By forming an individual C-Corp, doctors can not only optimize their tax strategies but also protect their personal assets from potential liabilities.

The concept of doctors operating as individual C-Corps has gained traction due to the unique advantages it presents. More and more medical professionals are opting for this business structure due to the potential benefits it can provide in terms of taxation and liability protection.

As I work with physician clients with SimpliMD, and we do our “As is/As If” feasibility study on them—we actually determine which business structure is best for them from a tax standpoint: a W-2, S-Corp, or C-Corp. The numbers guide our real conversations and allow us to not “guess” which is best, bet actually make a case study analysis. Once your income starts to push over $500,000-$600,000 annually—forming a C-Corp often provides some advantages over an S-corp election for an individual professional micro-corporation.

If you are interested in checking out if a C-corp would work for you, contact me here https://calendly.com/drinc/45min to receive a free 45-minute coaching conversation about it.

Tax Deduction Tips for C-Corps

Operating as a C-Corporation (C-Corp) provides you with unique tax advantages, including a wide range of deductible expenses that can help reduce your overall tax liability. By taking advantage of these deductions, you can optimize your tax situation and retain more of your hard-earned income. In this blog post, I will explore the top 15 C-Corp tax deductions specifically tailored for you as a micro-C-Corp, enabling you to maximize your tax savings.

1. Salaries and Bonuses:

   • C-Corps can deduct reasonable salaries and bonuses paid to yourself and other employees. Setting appropriate compensation levels helps minimize the company’s taxable income.

2. Employee Benefit Programs:

   • C-Corps can establish employee benefit programs, including health insurance plans, dental plans, vision plans, and retirement plans. The contributions made towards these programs are deductible expenses for the corporation. Via my C-Corp I pay no out of pocket medical expenses ever. It’s a great deal and it’s all pre-tax dollars!

3. Rent and Lease Payments:

   • If your medical practice leases or rents office space, the rent payments are fully deductible for the C-Corp. This includes payments for medical offices, examination rooms, and other facilities.

4. Utilities and Office Expenses:

   • Deductible expenses include utilities (electricity, water, internet), office supplies, equipment rentals, maintenance, repairs, and other costs associated with running your medical office.

5. Medical Equipment and Supplies:

   • Costs related to medical supplies, equipment, and instruments necessary for your practice are deductible. This includes items such as stethoscopes, diagnostic tools, examination tables, and medical devices.

6. Business Insurance:

   • Premiums paid for business insurance policies, such as malpractice insurance, general liability insurance, and property insurance for your medical office, are deductible expenses.

7. Continuing Education and Professional Development:

   • Expenses for attending medical conferences, workshops, seminars, and courses to enhance your professional skills are deductible. This also includes the cost of educational materials and travel expenses associated with these events. I love traveling internationally to do my CME with CMEAway-as they offer a spouse who comes for a FREE arrangement.

8. Professional Association Dues and Subscriptions:

   • Deductible expenses include membership dues for professional organizations, and medical societies, and subscriptions to medical journals or publications that are directly related to your medical practice.

9. Marketing and Advertising:

   • Expenses related to marketing and advertising your medical practice, such as website development, online ads, print materials, and promotional events, are deductible.

10. Research and Development:

    • The associated expenses can be deducted if your medical practice engages in research and development activities. This includes costs for clinical trials, research studies, and the development of new treatments or technologies.

11. Depreciation of Assets:

    • C-Corps can deduct the depreciation of assets, such as medical equipment, computers, furniture, and vehicles, over their useful life. Depreciation allows you to recover the cost of these assets over time.

12. Employee Training and Education:

    • Costs related to employee training and education programs, such as workshops, certifications, and specialized training courses, are deductible for the C-Corp. This can include training for medical staff, administrative personnel, and other employees.

13. Charitable Contributions:

    • C-Corps can deduct charitable contributions made to qualified organizations. If your medical practice supports charitable causes or participates in community outreach programs, these contributions are deductible.

14. Legal and Professional Fees:

    • Fees paid to attorneys, accountants, consultants, and other professionals for services related to your medical practice are deductible expenses for the C-Corp.

15. Employee Fringe Benefits:

    • C-Corps can provide various fringe benefits to employees, such as transportation benefits, parking assistance, employee discounts, and wellness programs. These benefits are deductible expenses for the corporation.

As a doctor operating as a C-Corporation, understanding the specific tax deductions available can greatly impact your tax liability and financial well-being. By leveraging these deductions, you can optimize your tax situation and retain more of your professional earnings. It is essential to consult with a qualified tax professional or accountant who can provide personalized advice based on your specific circumstances and ensure compliance with tax laws. With careful planning and proper documentation, you can take full advantage of the deductions available to individual professional micro-C-Corp owners in the medical field.

Last week I reviewed the top 15 tax deductions for sole proprietors, and this few weeks we’ll review the same top 15 list for corporations—both S and C-corps.

The tax rules and low for sole proprietors, S-corps, and C-corps are unique and different, thus it’s important to understand exactly how you can maximize your tax advantages—depending on which taxable entity you choose.

Generally speaking, physicians who form choose to individually operate as a business entity will find that a professional micro-corporation elected as an S-Corp is their best option, but I recommend you meet with a tax or business professional to help to determine which is best for you. SimpliMD can do a feasibility study that will assist you with a comparative analysis of which business structure is best for you. I highly recommend you check this out.

As a doctor operating as an S-Corporation (S-Corp) of any type, you have the opportunity to take advantage of various tax deductions to reduce your overall tax liability. This offers unique tax benefits, allowing you to save on self-employment taxes and optimize your tax situation. In this blog post, we will discuss the top 15 S-Corp tax deductions specifically tailored for doctors, helping you maximize your tax savings.

1. Reasonable Compensation:

   • S-Corp owners must pay themselves a reasonable salary for the services they provide. By doing so, you can allocate a portion of your income as salary and the remainder as business profits, reducing your overall self-employment taxes.

   • Given your high income, reducing your self-employment “reasonable salary” to the lowest level possible will lead to significant tax savings.

   • I like to follow the 60:40 principle as a good starting point for lowering your salary. By this I mean you take the total dollars you would like to see your business flow into your household and multiply this number by 60% This would be considered a reasonable W-2 salary that your business is paying you. This 60% will have employment taxes removed. The other 40% can be delivered to you via distributions from business profits and the good news is that employment taxes do not need to be paid out of these dollars.

2. Employee Salaries:

   • If you have hired employees for your corporation, their salaries, and wages are fully deductible expenses for your S-Corp. This includes payments made to nurses, receptionists, technicians, and other staff members. In the case of a micro-business owner, this can include a spouse who might work as the corporate bookkeeper. This is what I do, and thus my wife and are the only two corporate employees.

3. Employer Share of Payroll Taxes:

   • As an S-Corp owner, you are responsible for paying the employer portion of payroll taxes, such as Social Security and Medicare taxes, for your employees. These taxes are deductible as a business expense.

4. Health Insurance Premiums:

   • S-Corp owners can deduct health insurance premiums paid on behalf of themselves and their employees. This includes premiums for medical, dental, and vision insurance. Keep in mind that the premiums must be established under a qualified plan and meet certain criteria to be deductible.

5. Retirement Contributions:

   • Contributions to retirement plans, such as a Simplified Employee Pension (SEP) IRA or a solo 401(k), are deductible for both the S-Corp and the individual owner. This allows you to save for retirement while reducing your taxable income

6. Rent and Lease Payments:

   • If your medical practice leases or rents office space, you can deduct these expenses as business rent payments. This includes payments for medical offices, examination rooms, and other facilities.

7. Utilities and Office Expenses:

   • Deductible expenses include utilities (electricity, water, internet), office supplies, equipment rentals, maintenance, repairs, and other costs associated with running your medical office. This includes phones/cell phone plans.

8. Medical Equipment and Supplies:

   • Costs related to medical supplies, equipment, and instruments necessary for your practice are deductible. This includes items such as stethoscopes, diagnostic tools, examination tables, medical devices, computers, and cell phones.

9. Continuing Education and Professional Development:

   • Expenses for attending medical conferences, workshops, seminars, and courses to enhance your professional skills are deductible. This also includes the cost of educational materials and travel expenses associated with these events.

   • The great thing about this event is that as long as it is qualifying CME, you can do this anywhere in the world. My favorite group for doing this is CME Away because they allow spouses to join the trip for free and they have awesome destinations and itineraries.

10. Professional Association Dues and Subscriptions:

    • Deductible expenses include membership dues for professional organizations, medical societies, and subscriptions to medical journals or publications that are directly related to your medical practice

11. Business Insurance:

    • Premiums paid for business insurance policies, such as malpractice insurance, general liability insurance, and property insurance for your medical office, are deductible expenses.

12. Marketing and Advertising:

    • Expenses related to marketing and advertising your medical practice, such as website development, online ads, print materials, and promotional events, are deductible.

    • Personally, I like to contribute to supporting various community events and charities and this is a nice deductible way to do that.

13. Business Meals and Entertainment:

    • Costs associated with business meals and entertainment that are directly related to your medical practice, such as meals with colleagues or networking events, can be partially deductible. Keep detailed records and receipts to support your deductions.

14. Travel Expenses:

    • You can deduct your travel expenses if you travel for business purposes, such as attending medical conferences or visiting patients in different locations. This includes airfare, lodging, meals, and transportation costs.

15. Home Office Deduction:

    • If you have a dedicated space in your home that is used exclusively for your medical practice, you may be eligible for a home office deduction. This allows you to deduct a portion of your home-related expenses, such as mortgage interest, property taxes, utilities, and maintenance costs. There are IRS guidelines you must follow to accurately claim this, so work with your tax professional to do this.

16. Bonus: The Augusta Deduction

    • When it comes to tax planning for S-Corporations, the Augusta Deduction is a valuable strategy that shouldn’t be overlooked. This deduction allows S-Corp owners to take advantage of significant tax savings when it comes to their personal residence.

      The Augusta Deduction is named after the prestigious golf tournament held annually in Augusta, Georgia. It refers to the practice of renting out a personal residence for up to 14 days per year and receiving rental income without having to report it as taxable income. This unique tax benefit can result in substantial savings for S-Corp owners who have a home that is desirable as temporary lodging during high-demand events like golf tournaments, conferences, or other local attractions. This has morphed into your micro-corporation renting your personal residence from you for the purposes of a business meeting—14 times per year.

      By utilizing the Augusta Deduction, you can generate additional income from the rental fee— that is tax-free while simultaneously reducing your business’s taxable liability. This deduction can be particularly advantageous for those who own homes in prime locations or areas with high demand for short-term rentals.

      It’s important to note that taking advantage of the Augusta Deduction requires careful planning and adherence to IRS guidelines. Proper documentation and record-keeping are essential to ensure compliance with tax regulations. Consulting with a knowledgeable tax professional is crucial in navigating this deduction and maximizing its benefits

17. Bonus Bonus: Transportation Expenses: Deductible transportation expenses include the cost of traveling to visit patients, attend medical conferences, and make business-related trips. This can include mileage, parking fees, tolls, and public transportation expenses. The federal mileage reimbursement rate is set by the IRS, and you must track your mileage and generate a report for this deduction. I personally like using the app MileIQ for this purpose. You can also deduct your actual automobile expenses if your vehicle is used for business purposes. This deduction allows self-employed individuals to deduct expenses related to their business vehicles, including depreciation, maintenance, and fuel costs. Section 179 of the Internal Revenue Code provides an opportunity for small business owners to deduct the cost of qualifying vehicles used for business purposes. This deduction allows you to immediately expense a portion or the full. By utilizing Section 179, you can potentially reduce your taxable income and lower your overall tax liability. However, it’s crucial to understand the specific rules and limitations that apply. For example, there are maximum deduction limits and requirements regarding how much the vehicle is used for business purposes. It’s important to consult with a tax professional or accountant who can guide you through the process and ensure compliance with IRS regulations. They can help determine if your vehicle qualifies for Section 179 deduction and assist in accurately calculating the allowable expense. One of the key elements to qualify is the vehicle’s gross vehicle weight must be 6000lbs or greater. This year, I am using my Section 179 deduction for the purchase of a Ranger Rover Sport that will be used for business purposes. Since bonus depreciation is being phased out, I wanted to get this more expensive vehicle purchased before it goes away completely. The extra tax savings is enormous with this loophole.

As an S-Corp owner, understanding the specific tax deductions available to doctors can significantly impact your tax liability and overall financial health. By taking advantage of these deductions, you can optimize your tax situation and maximize your savings. Remember to consult with a qualified tax professional or accountant who can provide personalized advice based on your specific circumstances and ensure compliance with tax laws.

Interested in finding out if you would benefit from forming a professional micro-corporation as an S-corp, schedule a FREE 45-minute consult with SimpliMD here: https://calendly.com/drinc/45min

W-2 Physicians are getting slaughtered by taxes and they feel helpless to do anything about it. Sadly this is mostly true, as long as they remain W-2 workers.

But their self-employed peers know that they have access to two small business methods that significantly lower their tax burden:

1. On the income side of the ledger-they keep their self-employed “reasonable” salary at a low level while also receiving tax-advantaged corporate distributions

2. On the expense side of the ledger-they maximize their household advantaged deductible business expenses.

Both steps have the same net effect to lower the taxable adjusted gross income for the self-employed doctor—thus both steps lead to less taxes paid.

The W-2 physician can’t make either of these moves.

Business Expense Deductions

Too many of you are hyperfocused on income and forget the flipside of professional earnings—expenses.

Both offer a path for adding dollars to your household.

A couple of my recent posts addressed the income side:

• Knowing your value in the marketplace

• Knowing how much to pay yourself as a self-employed doctor

This post is going to address a relatively hidden subject to many doctors, which is leveraging tax-advantaged business expenses as a way to lower your taxes.

With the physician labor market primarily being populated with employees, the general need to track and leverage business expenses has faded in importance. W-2 employees don’t get to deduct their professional business expenses thus there is little incentive for most of you to understand this subject.

But business expense deductions are a concept that every doctor should be tuned into.

Why? Because you lose a lot of your hard-earned income to taxes every year.

Business deductions are one of the best ways for you to reduce the tax drag on your high income.

Only those of you who receive your income as a non-employee get to access the use of these deductions. Thus if you are exclusively an employed W-2 doctor, you are left out in the cold with this tax play.

There are a number of advantages to being an employee, but taxes are not one of them. Physicians as W-2 employees are among the most heavily taxed citizens within the US, and if you earn >$400,000 it may get worse.

How can you avoid this? By either working full-time or part-time as a non-employee and thus opening the door to business expense deductions.

In contrast to W-2 workers, if you earn your income through your professional micro-corporation or designate yourself as a sole proprietor/single-member LLC, you are allowed to deduct your business expenses. This applies both to your primary job and your side jobs.

When it comes to income—W-2 workers vs Independent Contractors will be relatively equivalent in regard to their fair market value compensation. Still, non-employees will have a slight advantage due to their ability to manage their taxable dollars.

But when it comes to expenses and taxes-non-employee independent contractors have a sizable advantage over W-2 employees.

Many of you are starting to become more aware of the tax burden associated with W-2 work, and thus you and your peers are transitioning to full-time or blended non-employee jobs.

With as many as 40% of doctors performing side jobs, it’s common for you to have a combination of W-2 and 1099 income. In fact, as I interact with clients through SimpliMD, I see this more and more frequently—stacking jobs is increasingly normal for the younger generation of doctors.

Thus the importance and value of deductible business expenses are growing among our tribe as more and more of you work as non-employees and provide your professional services as independent contractors.

So let’s take a look a closer look at this subject—because it can save you a lot of money!

Tax Advantages Of Being A Single-Member Business

If you have organized yourself as an individual business—whether that be as a sole proprietor, single-member LLC, or as a professional micro-corporation—you have unique tax opportunities when it comes to business deductions. By understanding and utilizing these deductions effectively, you can maximize your tax savings and ensure you and your micro-corporation operates in the most financially efficient manner possible.

One of the key advantages of being a physician who works as an individual business is the ability to deduct your professional-business expenses. These deductions can include everything from auto-expenses, office supplies, and equipment to professional development courses and even travel expenses related to attending conferences or medical seminars. For instance, my recent CME to Iceland, Ireland, and England was covered by business—and because I went with CME Away by SeaCourses—my spouse was included for FREE.

It is important for a physician who is a business to work closely with knowledgeable tax advisors or accountants who specialize in healthcare professionals. They can provide valuable guidance on which expenses qualify as legitimate business deductions and help navigate the complex world of tax regulations.

Why Schedule C Is Important

Schedule C is an essential component of the U.S. income tax system, particularly for self-employed individuals and small business owners. It is a form that allows taxpayers to report their profits or losses from a business or profession as part of their annual tax return.

For those who are unfamiliar with Schedule C, it serves as a comprehensive record-keeping tool for reporting various aspects of business income and expenses. By completing this form accurately, individuals can ensure compliance with tax regulations while maximizing deductions and minimizing their overall tax liability.

Understanding Schedule C is crucial for anyone engaged in self-employment or operating a small business. It provides a clear framework for documenting revenue sources, deductible expenses, and calculating net profit or loss.

For high-income earners like yourself, it is critical for you to understand the IRS options available to reduce your taxes.

For doing the exact same work, a physician being paid as a W-2 employee will pay significantly more in taxes than the physician who receives it as a 1099 non-employee income. This is all due to being able to use Schedule C on your 1040 individual tax return as a sole proprietor or single-member LLC.

If you are organized as a professional micro-corporation you will get to deduct your business expenses as well—but it will be done with your corporate tax return via forms 1120 or 1120S.

Who Uses Schedule C?

The quick answer to use Schedule C is sole proprietors and single-member LLCs.

But let me explain a bit more because you will arrive at unlocking schedule C through the use of IRS Form W-9.

If you are receiving your earnings through your business, those earnings are considered non-employee income. You will have to complete a W-9 form for the company paying you for your professional services. This will notify the IRS that your income will be reported by the business entity checked on Form W-9.

It also informs the IRS that the business entity will be making a quarterly tax payment for that income.

This is in contrast to the Form W-4 that employees complete. It is a form used by employers to inform them how much to withhold from your paycheck for your taxes. The IRS makes the employer responsible for this process with employees.

The W-9 Form

The W-9 form serves as a request for taxpayer identification number and certification, enabling businesses to gather necessary information from individuals or entities they engage in financial transactions. If you earn your money as a professional micro-corporation, this form becomes particularly relevant when engaging in professional service agreements (PSAs), receiving payments from insurance providers or government agencies, or conducting business with other entities that require tax reporting.

When you complete this form for your non-employee compensation, you will check the box that indicates which type of business you are as an individual.

When you receive your income as a sole proprietor or single-member corporation, it unlocks Schedule C for your use for the profit and loss of your business.

This special Schedule C space is not accessible to W-2 workers, nor is it accessible to S & C Corps or partnerships.

Schedule C is Valuable To Doctors

Physicians as individual micro-businesses play a crucial role in the healthcare industry, and understanding the importance of Schedule C is essential for these entities. Schedule C is a tax form that allows you to report your business income and expenses as sole proprietors or single-member LLCs. By accurately completing this form, physician micro-corporations can ensure compliance with tax regulations while maximizing their financial benefits.

One of the key reasons why Schedule C is important for physician micro-corporations is that it enables them to claim deductions for business expenses. These deductions can significantly reduce their taxable income, resulting in lower tax liabilities. From office rent and equipment costs to professional fees and marketing expenses, Schedule C allows physicians to deduct various expenditures associated with running their micro-business.

Schedule C plays a vital role in the success of physician micro-corporations. It allows these entities to claim deductions for business expenses, demonstrate profitability, and make informed decisions about their operations.

Differences Between Sole Proprietor & Professional Micro-Corporation Deductions

It is noteworthy that all of this information about Schedule C deductions will be applicable to self-employed doctors who have single-member professional corporations (PC) or professional LLCs (PLLC) taxed as S or C-Corps—however you will not use Schedule C, instead these deductions will be used within your 1120 corporate return.

It is also noteworthy that the tax code for sole proprietors/single-member LLCs and single-member professional micro-corporations taxed as S-Corps or C-Corps are unique and a bit different from another.

Sole proprietors & single member LLCs using Schedule C get access to “basic” tax advantages in terms of professional business expenses. The advantage of this business structure for you is its simplicity. Moreover, they eliminate the need for complex legal formalities expenses, and paperwork associated with other business structures. You only file one integrated tax 1040 tax return and Schedule C represents your business activity that is integrated into your individual taxes.

The bottom line is that sole proprietors & single member LLCs are cheaper and simpler to manage.

In contrast, professional micro-corporations taxed as S-Corp and C-Corps provide additional tax advantages not available to the sole proprietor/single-member LLC. These tax advantages include some “hidden deductions” that only the wealthy know about including robust deductible fringe benefit options. The downside is the larger expense of setting up and operating/maintaining your corporation. Additionally, you will have to complete a corporate tax return on top of your individual 1040 return.

The cost/benefits of which business structure is best is highly individualized and should be done under the direction of a tax professional or accountant. At SimpliMD we are experts in helping physicians sort through these decisions. Our legal department is directed by an attorney with added tax qualifications and works exclusively with doctors. You can reach us here for a free business coaching session: https://calendly.com/drinc/45min

High net-worth individuals have unique business, asset, and fiduciary needs and I advise you to work with professionals who understand you in this context.

Due to your large income, high tax bracket, and the need for asset protection— your best individual business structure will usually be a single-member professional corporation (PC) designated as an S-Corp. This is especially true if you will be earning $40,000 or more through your business. Check out this case study if you want to understand how and why this is best.

Overview of Schedule C

So now, let me break down Schedule C for you and take a closer look at the different sections so you can know what information you will need to provide when you complete this form

Part I – Income

The first part of Schedule C is where you report all of your business income. This includes any money you earned from sales, services, or other sources related to your business. You’ll need to provide a description of the type of income you received, the date you received it, and the amount of money you earned. If you have more than one type of income, you’ll need to report each one separately.

You may also need to include any returns, refunds, or allowances you received for your business. If you received any payments that were not reported on Form 1099, you’ll need to report them on this section of the form as well.

If you have both W-2 and 1099 income, only your 1099 income will be reported here

Part II – Expenses

In this section, you will report your business expenses incurred to run your business like advertising, car and truck expenses, commissions and fees, depreciation and section 179 expense deduction(auto), insurance(not health insurance for the owner), interest, legal and professional services, office expenses, rent or lease expenses, repairs and maintenance, supplies, FICA taxes on any employees, medical license(s), travel, meals, and entertainment expenses.

In regards to health insurance for the sole proprietor, it is a deductible expense, but note it is NOT deducted on Schedule C.

A sole proprietor with no employees can deduct 100 percent of the premiums for health insurance for himself, his spouse, and any dependents under the age of 27. The taxpayer can’t be covered by any other health insurance, and the premium can’t exceed the profits of the business. The deduction is taken on Line 29 of Form 1040 or 1040A, and a taxpayer doesn’t have to itemize deductions to qualify

Additionally, some expenses may only be partially deductible, such as the cost of a vehicle, or cell phone used for both personal and business purposes.

I recommend you keep hard copies of your documentation for each expense in a bank box or you can use cloud-based services to scan and store these documents.

It is a good idea to use an online accounting-bookkeeping program like Quickbooks for The Self-Employed for tracking your expenses, at $30/month it is worth it. Wave Accounting offers a free version but I don’t have any experience with it.

The most expensive option will be to hire a bookkeeper and accounting service to manage all of this for you.

Part III – Cost of Goods Sold

If your business sells products, you’ll need to complete Part III of Schedule C. This section is used to calculate the cost of goods sold (COGS), which is the cost of the products you sold during the year. To calculate your COGS, you’ll need to take into account the cost of the raw materials, labor, and other expenses that went into producing the products you sold.

This won’t apply to most of you, endless you are selling supplements, pharmaceuticals, books, or other healthcare-related items.

Part IV – Information on Your Vehicle

If you used a vehicle for business purposes during the year, you’ll need to complete this section of Schedule C. You’ll need to provide information about the vehicle, including the make and model, the date it was placed in service, and the total miles driven during the year.

You’ll also need to provide information about the expenses you incurred for the vehicle, such as the cost of gas, oil changes, and repairs. You’ll have the option to deduct your vehicle expenses using either the standard mileage rate or the actual expenses method.

Part V – Other Expenses

In this section, you can report any other expenses that were not included in Part II or Part III of Schedule C.

Part V provides a range of expense examples that cover a wide array of business-related costs. By familiarizing yourself with these examples, individuals can ensure they are taking full advantage of every eligible deduction available.

Some Specific examples of the “other expenses” for you as an individual physician business include:

• Bank Fees

• Cell Phone

• CME

• Credit Card Fees

• Business related Dues and Subscriptions

• Internet

• Medical Business Equipment like a Stethoscope or pocket ultrasound, etc…

Line 30 Expenses for Business Use of Your Home

You do have the option of deducting home office use of your home, but in order to do this, you must keep in mind the definition of your home office location. Just because you work at home doesn’t mean you can write off all the power and water bills in your house. The IRS has very precise language regarding what expenses are allowed for a home office tax deduction:

• First, the area you use for work in your home must be your principal place of business

• Next, you can only deduct expenses for the portions of your home that are exclusively used for business

• You can’t work for four hours in your kitchen and deduct your new refrigerator, for instance

• You must have a dedicated area that you only use for business, and only expenses generated by that area can be used on Form 8829

Summary

The final part of Schedule C is the best part because it is used to summarize your income, expenses, and other deductions. You’ll need to calculate your net profit or loss for the year by subtracting your expenses from your income. If you had a net profit, you’ll need to include this amount on your personal tax return as income.

In the end, this entire process will reduce your taxable income reported on Form 1040 and ultimately you will be paying less taxes than if you received the same income as a W-2 employee.