Tax Deductions for Massage Therapy

No matter your status, Ellis recommends hiring a certified public
accountant to make sure you are not missing anything. “Another bonus … is their
fees are tax-deductible,” she added. ‍This applies to both flat monthly fees you pay to use these services, and any percentages of your revenue they collect. ‍For instance, if you drove 10,000 miles last year, and 1,000 of those miles were to attend conferences or deliver workshops, you could deduct 10% of your vehicle expenses. The cost of hiring a bookkeeper and a tax accountant outweighs the cost of paying penalties and interest for underpayment of taxes. Massage therapy software helps with so many administrative tasks.

While side jobs have been around for eons, COVID-19 altered the landscape of traditional, permanent, and/or semi-permanent side hustles … possibly forever. For example, there is an increased interest in the gig economy for those who never thought of working independently, and the avenues for performing gig work are growing daily. For the first time, gig workers and independent contractors became eligible for state unemployment benefits during the height of the pandemic. And while those protections have since expired, it prompted many to consider the value of building this type of safety net for gig workers in a more permanent way.

Utilities and Continuing Education

So, it is wise to consider whether a massage is tax deductible if you intend to pay for several sessions in the near future. Meeting an out-of-town client, attending a conference or networking is all part of the job. There are many reasons for you to travel for work as a busy and they can all be added as tax write-offs. They also count as business trips, so you can write off your travel costs. Networking is a core practice of a successful   and it can also be added to your tax write-offs. You likely often meet clients or people in your field at restaurants to chat about work, discuss projects and sign deals.

These expenses, when used to offset taxable income, can lower the amount of income tax owed. The main aim of tax deductions is to incentivize certain spending, investments, and practices. We created a list of the most valuable tax write offs for therapists. The best way to ensure you’re taking advantage of every possible tax deduction is to have a comprehensive bookkeeping and accounting solution in place. If there’s one thing massage therapists have a lot of, it’s sheets. You can deduct the cost of buying sheets, towels, blankets, and pillow cases from your massage therapy taxes.

Beauty and Bodywork Insurance

Lozelle Mathai, MBA, CFEI, is a financial accountant with over 18 years of experience in the field of financial management and accounting. She is the owner of The Body of Accounting, a division of Closing Your Books LLC. The Body of Accounting is an accounting consultancy firm that educates massage and bodywork business owners on how to manage, maintain and understand their business finances. Next, hire a bookkeeper and develop a relationship with your tax accountant. You should not wait until April 15 to consult a tax professional, because each year brings a new set of rules on which expenses can and cannot be deducted.

The cost of accountants, lawyers and others are included here. Only those costs directly traced back to your massage practice can be deducted. Like many other business owners, when it comes to anything having to do with the term tax, your eyes start to roll. Recognizing and utilizing all of the tax deductions accessible to you can significantly benefit your massage therapy business and reduce your tax liability. Operating a business typically requires you to get some sort of business license.

A Self-Employment Tax Guide for Therapists

You can deduct the cost of courses, workshops, and certification programs related to your profession as a therapist, but it needs to meet at least one of two criteria. “Business purposes,” in this case, do not include your regular commute to work. You need to be driving somewhere other than your office (or wherever you normally hold appointments) in order to qualify for this expense. If you frequently use your personal car for business purposes, you can deduct some of the cost of fueling and maintaining it. If you use your computer to create email marketing campaigns, write SOAP Notes, or any other business task, it qualifies as a business expense.

• You can only take a tax break for the part of your usage that is related to your business.
• To stay on the right side of the law with the IRS, it’s vital to understand which business expenses qualify as tax write-offs.
• In compliance with IRS requirements, you must keep track of documents such as invoices, receipts, and any other significant paperwork that validates the amount and purpose of your deductions.
• The 100% expensing is also available for certain productions (qualified film, television, and live staged performances) and certain fruit or nuts planted or grafted after September 27, 2017.
• If you do not pay quarterly taxes on time and in the amount required, you will owe a penalty when you file your annual return.

The list goes on, with additional tax write-offs available for costs such as moving expenses, and salary and benefits for private practice owners who have employees. Next, recurring expenditures such as those for professional association and membership fees, as well as licensing costs, are eligible for tax deductions. However, not all expenses can earn you a tax deduction.

If you are employed, your employer withholds taxes for you, and you do not have to file quarterly estimated tax. Your employer gives you a W-2 form that shows how much income you have been paid for the year and how much money was withheld for state, federal, Medicare and FICA (Social Security). Learn the basics of how to handle taxes for your massage therapy practice. The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice.

• IRS, “IRS Announces Changes to Retirement Plans for 2022,” updated September 29, 2022, irs.gov/newsroom/irs-announces-changes-to-retirement-plans-for-2022.
• For example, you could deduct your self-employment health insurance premiums up to ​100 percent​, while providing coverage for yourself, children and spouse.
• But, if you use the rug in your home, too, it’s considered a personal expense.
• If you printed them yourself, the cost of the paper and ink count as expenses too.
• The cost of hiring a bookkeeper and a tax accountant outweighs the cost of paying penalties and interest for underpayment of taxes.
• You can learn more about issuing W-2s on the IRS website.

This deduction was signed into law as part of the Tax Cuts and Jobs Act in 2017, and it’s also known as the section 199A deduction. This 20% deduction means taxpayers can exclude up to 20% of their QBI from their federal income taxes whether or not they itemize, but it doesn’t include any deductions from self-employment taxes. bookkeeping for massage therapists You also may be able to deduct work-related, educational courses or seminars if they meet certain requirements. Education typically meeting the requirements includes refresher courses and courses on current developments. Costs including travel to courses or seminars on the latest massage techniques, for example, would qualify.

Personal therapy

This could be the chairs in your waiting area, a new painting you hung on the wall, or a new desk for your office. If you bought it for your clinic, you can deduct it on your taxes. Did you attend a health and wellness https://www.bookstime.com/ conference this year? What about conferences that were geared toward a segment of the population you serve? If the conference was related to some aspect of your massage business, it’s a qualifying expense.

When a business contracts with a massage therapist to provide massage services, the party who bills the customer is responsible for collecting and reporting the sales tax. A few times a year, I run a small coaching group for private practice therapists. In the program, I help them to rewrite their money stories, charge sustainable fees and maintain their ideal caseload, and learn the foundations of niching and marketing to call in their ideal clients and reduce burnout. Learn more about Grow a Profitable Practice From the Inside Out here. General ledger—A record listing transactions (taken from the accounting journal) by account type.

Credit Card Processing Fee

If you travel for business—for instance, to a conference, or in order to give a talk or facilitate a workshop—you can deduct most of the costs. And you may even be able to squeeze in some vacationing while you’re at it. Renewal of licensing requirements and registration of your massage practice is deductible. Did you have to buy meals while you were at a conference or seminar?