Private Practice and Tax Deductions Please allow me to comment on the informative article (Dec. 20, 2011) titled “Forge Your Own Path.” It provides a realistic, positive assessment of issues faced by the prospective private practitioner. As a former clinician, I share the enthusiasm. Self-employment is an equation, composed of income vs. expenses. In many ... Inbox
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Inbox  |   February 01, 2012
Private Practice and Tax Deductions
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Practice Management / Professional Issues & Training / Inbox
Inbox   |   February 01, 2012
Private Practice and Tax Deductions
The ASHA Leader, February 2012, Vol. 17, 2-38. doi:10.1044/leader.IN1.17022012.2
The ASHA Leader, February 2012, Vol. 17, 2-38. doi:10.1044/leader.IN1.17022012.2
Please allow me to comment on the informative article (Dec. 20, 2011) titled “Forge Your Own Path.” It provides a realistic, positive assessment of issues faced by the prospective private practitioner.
As a former clinician, I share the enthusiasm. Self-employment is an equation, composed of income vs. expenses. In many respects, expenses are more important because they offset other taxable income or carry forward until the practice becomes profitable. The self-employed do incur additional expenses, which add a new and daunting dimension to the prospect of starting a private practice. However, they are worth far more than many realize. Business expenses reduce taxable income dollar for dollar. Miscellaneous itemized deductions for employees are far less generous and difficult to capture.
The article singled out loss of employer-provided health insurance as a detractor. The tax code allows self-employers to take an adjustment to income for their family’s health insurance premium. Congress addressed this and other issues to provide equitable treatment to self-employers. In my tax practice, I constantly educate my clients on available business credits and deductions. Examples include transportation expenses (operating expenses, vehicle depreciation), professional license, dues, etc. Many are unavailable, or limited, to employees. Use of the home office for business allows deduction of expenses allocated to the office square footage.
As a rule of thumb, self-employment requires approximately 60% of employee gross income to realize equivalent take-home pay. Those who have simultaneous employment and self-employment enjoy additional tax benefits.
Larry Shotland Bozeman, Montana
Editor’s note: We would like to alert readers to a valuable resource on private practice: the American Academy of Private Practice in Speech Pathology and Audiology (AAPPSPA). At the Leader’s request, AAPPSPA has compiled a list of private practice resources, available as a supplement to the Dec. 20, 2011, issue of The ASHA Leader.
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FROM THIS ISSUE
February 2012
Volume 17, Issue 2