Allowable Deductions For Self-Employed
In addition to the typical deductions allowed for non-reimbursable expenses incurred by employees and business expenses of self-employed, health care professionals who are not employees may deduct the following expenses to the extent they are directly related to the practice of their profession such as:
- Auto expenses incurred in making calls and performing services
- Dues to professional organizations
- Lease or rent payments made for office/clinic space
- Lease payments for equipment and furniture
- Books, if useful life is less than one year
Tip: If useful life of books, manuals and equipment is more than one year the expense is considered a capital asset and must be depreciated over the useful life of the item.
- Equipment purchased, with useful life of less than one year
- Membership dues for professional organizations, associations and public service clubs (e.g. Rotary)
- Cost for professional journals
- Costs for professional information services and subscriptions
- Convention attendance expenses
- Business entertainment expense directly related to expansion of a medical practice
- Uniforms
Deductible Expenses as an Employee
If you are a health care professional who is an employee you may deduct non-reimbursed business expenses in excess of 2% of your adjusted gross income (AGI). Typical expenses include:
- Uniforms of nurses, orderlies and technicians, including cleaning and maintenance provided they are:
• a requirement of the job
• not adaptable for common wear
- Protective wear, such as gloves, masks and safety glasses
- Work shoes
- Union dues
- Trade association dues
- Education within your profession
- Work related travel expenses
- Convention/Trade Show attendance expenses
- Practice insurance
Reduced Deductions for High Incomes
Health care professionals with individual incomes over a certain adjusted gross income (AGI) threshold must reduce their allowable itemized deductions by 3% of the excess amount over the threshold. No reduction is required for:
- Medical expenses
- Investment interest
- Casualty, theft and wagering losses
Note: The reduction can never be more than 80% of your itemized deductions. The reduction is applied after the disallowance of miscellaneous expenses below 2% of your income.
Non-deductible Expenses
- Club dues, other than professional organizations or associations, whether for pleasure or busines
- Cost for professional libraries with useful lives of more than one year must be capitalized and depreciated over their lives
- Foreign convention attendance expenses
- A physician's staff privilege fee paid to a hospital must be capitalized and depreciated
- Commuting expense to and from place of work
