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The Top 15 Tax Deductions for Doctors Who Are S-Corps

Jan 02, 2025

As a physician who operates as professional micro-corporation taxed as an S-Corp, tax season offers you the opportunity to leverage deductions that can significantly reduce your taxable income. I’ve compiled this guide based on the blog post July 21, 2023 on Doctor Incorporated, "Top 15 Tax Deductions for Doctors Who Are S-Corps." My goal is to break these deductions down into actionable insights you can apply in your own practice.

Running your own professional micro-corporation provides both freedom and financial opportunities, and optimizing your tax deductions is a key part of ensuring you thrive as an owners of a professional micro-corporation taxed as an S-Corp owner.

Let's explore the top 15 deductions that could significantly benefit you as an independent doctor and entrepreneur. Taking a closer look at these opportunities can provide valuable insights into optimizing your financial strategy and enhancing your professional journey.

1. Salaries and Wages

Your S-Corp is required to pay you a "reasonable salary" as an employee. The good news? That salary is deductible, as are wages you pay to other employees. Be strategic about employees and like most physician micro-corporations you will be the only employee, although you could consider hiring your wife or kids.

2. Health Insurance Premiums

If your S-Corp pays for your health insurance premiums, those costs are deductible for the business. This includes family coverage, making it one of the most valuable tax benefits for physician S-Corp owners.

3. Retirement Plan Contributions

S-Corps allow you to contribute to retirement plans such as a Solo 401(k) or SEP IRA. Not only do these contributions reduce your taxable income, but they also help you build long-term financial security.

4. Home Office Deduction

Do you run part of your S-Corp from a dedicated home office? If so, you can deduct a portion of your home expenses, including utilities, rent, or mortgage interest. Just ensure your home office meets IRS requirements.

5. Continuing Medical Education (CME)

CME expenses are 100% deductible, so whether you’re attending conferences or purchasing online courses, you can offset these costs. This deduction supports your professional development while lowering your tax bill.

6. Business Equipment and Supplies

Any equipment or supplies you purchase for your medical practice are deductible. From stethoscopes to computers, keep detailed records of these purchases to maximize this benefit.

7. Marketing and Advertising

Whether you’re running Google Ads, maintaining a website, or printing business cards, marketing expenses are fully deductible. For those expanding their practice’s visibility, this deduction is invaluable.

8. Professional Liability Insurance

Your malpractice insurance premiums are a necessary cost of doing business and are fully deductible. This significant expense can offer you peace of mind and tax relief. If you are looking for a great independent malpractice broker, I recommend MEDPLI.

9. Professional Fees

Membership dues for medical associations, professional subscriptions, and licensing fees all qualify as deductions. Staying compliant and connected in your field pays off both professionally and financially.

10. Vehicle Expenses

If you use a vehicle for your S-Corp’s business operations, you can deduct expenses such as mileage, fuel, insurance, and maintenance. Keep a mileage log to substantiate this deduction.

11. Travel Expenses

When you travel for conferences, locum work, or other business purposes, you can deduct airfare, lodging, meals (50%), and other travel-related costs. Business travel deductions can add up quickly.

12. Software and Technology

Investments in software such as EHR systems, accounting tools, or telehealth platforms are deductible. These tools not only enhance your practice but also reduce your tax burden.

13. Charitable Contributions

Your S-Corp can deduct charitable donations, whether in cash or in-kind. If your practice supports local charities, this is a great way to give back while reducing taxable income.

14. Depreciation of Assets

If your S-Corp owns expensive assets such as medical equipment or office furniture, you can take advantage of depreciation deductions over time. This deduction recognizes the wear and tear on your assets.

15. Legal and Accounting Fees

The cost of hiring professionals to manage your taxes, legal matters, or payroll is deductible. Investing in expert advice often leads to better financial outcomes.

Practical Tips for Maximizing Deductions

Keep Detailed Records Accurate bookkeeping is critical. Use accounting software or hire a bookkeeper to ensure every deductible expense is documented.
Work with a CPA A tax-savvy CPA who understands the intricacies of physician S-Corps can help you identify additional deductions and avoid costly mistakes.
Plan Ahead Tax planning is a year-round activity. Don’t wait until April to start organizing your finances—regular reviews with your CPA can help you stay on track

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These opportunities are crafted to empower you on your path toward greater autonomy and success.

Final Thoughts

As an S-Corp owner, you have the opportunity to control your professional and financial destiny. Taking advantage of these 15 deductions not only reduces your tax liability but also ensures your micro-corporation remains profitable and sustainable.

Remember, these deductions are tools to help you thrive. If you’re not yet maximizing them or if you’re ready to take the leap into self-employment, SimpliMD is here to support you every step of the way.