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NOTICE TO RESIDENTS OF MARYLAND

We are NOT affiliated with the State of Maryland. If you are looking for information about Maryland income taxes, please go to www.marylandtaxes.com.


Useful Links:

FindAGoodCPA.com - Not a healthcare professional?  Find a CPA or EA who understands the tax issues specific to you.

IRS Web Site - for tax forms, publications, and general tax information.

Exchange Authority - New England's first authority for IRC 1031 Exchanges

Cost Segregation Studies - Accelerate tax depreciation deductions on new and existing buildings through cost segregation studies

Social Security - find out the latest rules or your projected retirement benefit.

The Company Corporation offers fast, reliable & affordable incorporation and LLC services.

 


EXPENSES COMMON TO HEALTHCARE PROFESSIONALS

Below is a list of professional expenses commonly incurred, and deducted, by young healthcare professionals.  Remember, to be deductible, an expense must be both "ordinary" and "necessary" in connection with your profession.  (Check out our recorded presentation: Professional Expenses Commonly Deducted by Doctors)

 
Item

IRS
PUB


Deductible


Non-Deductible

Automobile expenses

917

The portion of automobile expenses incurred while driving between two different workplaces, or between your principal residence and a temporary job site.  You can base the deduction on actual expenses incurred or on the standard mileage rate of $.54 for 2016, down from $.575 per mile in 2015. The portion of automobile expenses incurred while commuting between your principal residence and a regular place of business.
Beepers and pagers 529 The rental fees paid by you for beepers and pagers used in connection with your employment. Any costs associated with the personal use of these items.
Books/library 534 The cost of  reference books purchased during the year.  You can also depreciate your "library" the first year you put it into business use, based on the fair market value of the library on that date. Any books not related to your profession
Cellular phones & internet access 534 The business portion of the cost of the cellular phone can be written off.  Plus, you can deduct the business use portion of the monthly cellular phone bills and internet access fees. Any portion of the cost of the cellular phone and the monthly cellular phone bills and internet access fees relating to personal use.
Computer purchases 534 Depreciation on the business use percent of any computer or peripheral purchased (1) as a requirement of your employment and (2) for the convenience of your employer. Any computer and peripheral not specifically purchased as a requirement of employment or for the benefit of your employer.
Education, examinations and licenses 508 Expenses incurred that are required as part of your employment and maintain or improve your skills in your current profession. Expenses incurred that prepare or qualify you for a new trade or business, such as medical or dental school.
Equipment and instruments 534 Depreciation expense on any items purchased during the year, or based on the fair market value of equipment and instruments purchased in previous years but put into business use this year. Equipment and instruments not associated with your profession.
Home office 587 The percentage of your home (based on square footage) used regularly and exclusively in connection with your profession.  Great for renters since rent isn't otherwise deductible on your federal tax return. The portion of your home used for any non-business purpose during the year, even if just for one day.
Insurance 529 Malpractice insurance and insurance on business assets. Health, life and disability insurance.  Health insurance is deductible as an "adjustment to income" if you have net self-employment income.
Interest on school loans 535 Up to $2,500 of student loan interest paid during the year, subject to income limitations, is deductible as an "adjustment to income". Interest on school loans in excess of $2,500 per year.
Job search 529 Expenses associated with finding a new position in your current trade or business. Any expenses associated with finding your first job, or a job in a new trade or business.
Meals and entertainment 463 50% of the cost of a meal when there is a specific business purpose in connection with the meal, or while temporarily traveling on business. Personal meals, including meals while on call at a hospital located in the general vicinity of where you live.
Parking and tolls 463 Parking and tolls incurred in connection with traveling  between two different workplaces or between your principal residence and a temporary job site. Parking and tolls incurred in connection with commuting between your principal residence and a regular place of business.
Professional dues, journals and subscriptions 535 Fees paid to join professional organizations or to subscribe to their journals. Dues paid to social or athletic clubs.
Psychoanalysis n/a A licensed psychiatrist or psychologist who is undergoing psychoanalysis as a required part of training in that field. Any other licensed professional must claim costs associated with psychoanalysis as a medical deduction.
Supplies 535 Supplies, such as slides for presentations, that are required in connection with your employment. Supplies that don't fall within the definition of "ordinary" and "necessary" for a professional in your field.
Temporary job assignments 463 The travel, lodging, and 50% of the cost of the meals incurred during a job rotation outside the general vicinity of where you live.  The rotation must be for a specific period of less than one year, and you must intend to return to the city that you were living in prior to the rotation. Any expense associated with a job rotation outside the general vicinity of where you live that will last for more than a year, or for an unspecified length of time.
Travel and lodging 463 Travel and lodging expenses incurred while outside the general vicinity of your residence in connection with a deductible activity. Travel and lodging incurred when the primary purpose of the trip is not business related. 
Uniforms and cleaning 529 The cost of purchasing and cleaning clothing, such as lab coats and scrubs, required by your employer that isn't considered "everyday street clothing". Items such as suits, shirts, shoes, ties and wristwatches because they fit the description of "everyday street clothing".

IRS Pub indicates the IRS Publication that contains information on this topic.  You can access the IRS Pubs at www.irs.gov.

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How to Deduct Your Unreimbursed Business Expenses

How you deduct your allowable unreimbursed professional expenses depends on how you were compensated during the year:

  • Individuals compensated as employees (having taxes withheld from their pay) are required to deduct these type expenses as a miscellaneous itemized deduction on their Schedule A. These individuals are also required to complete and attach a Form 2106 or 2106-EZ, Unreimbursed Employee Business Expense, to their Form 1040.
  • Individuals compensated as independent contractors (having NO taxes withheld) deduct their professionals expenses directly against their income. These individuals are required to complete and attach a Schedule C or Schedule C-EZ, Profit or Loss From Business, to their Form 1040.
  • Individuals compensated as both employees and independent contractors need to determine whether to reflect a specific expense on the Schedule C or the Form 2106. Items which are specifically related to a person's income as an independent contractor, such as malpractice insurance and directly related auto expenses, will be deducted directly against that income. Other items, such as job search expenses, are most likely related to a person's employment and should be reflected on the Form 2106.
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