30 Tax Deductions For Your Massage Therapy Practice In 2023

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.

• Have a business-related checking account and credit card, for example, and keep a record of whom you paid, the amount, the type of expense and the date.
• But if you manage your massage practice out of your home and split your utilities between work and home, that’s a different story.
• “I recommend that the massage therapist try both methods to see which one generates a better tax deduction,” she said.
• You can also print reports for sales tax collected, if you’re required to do so.
• These activities do not have to include actually doing massage.
• Only those costs directly traced back to your massage practice can be deducted.

Remember, the key to successfully claiming tax deductions as a massage therapist is to stay organized and maintain accurate records of all business expenses. Consulting with a tax professional can also be beneficial, as they can provide additional guidance tailored to your specific situation. A common oversight many massage therapists make is neglecting to preserve precise and orderly financial records. Regularly recording and storing receipts and costs regarding your business is key as these records substantiate your claims for tax deductions. Failure to maintain these records might inadvertently result in missed deduction opportunities, while also increasing the chances of an audit if the declared expenses cannot be validated. Understanding how tax deductions work is an essential component of financial management, especially for professionals like massage therapists who incur a variety of job-related expenses.

Software

The field of massage therapy has significantly grown, bringing along with it the need for practitioners to understand available tax deductions. These financial advantages are particularly relevant for self-employed massage therapists. The IRS permits such deductions for ordinary and necessary expenses that arise while conducting the business. This allows you to lower your overall income – the amount upon which you are taxed. If you have employees, their salaries are tax deductions for your massage therapy business. So, is the software or service you use to manage your payroll.

Many of those tasks are directly related to your business taxes. A desk, chairs, lamps, and other home office necessities are all tax write-offs. Oil changes, repairs, and regular checkups are all tax-deductible if you drive for work. Spotify, Pandora, or other music streaming services you use while with clients are write-offs. Oils, lotions, stones, and other accessories used to give massages are deductible.

Tax Deductions For Your Massage Therapy Practice In 2023

Even if you only treat clients in your clinic, you can write off miles driven to run business errands and to massage events. It’s important to note, you CANNOT write off the miles you drive to and from your clinic every day, just out of the ordinary trips. If you own a massage clinic or work as an independent contractor, liability insurance is a must. Often massage therapists receive liability insurance by becoming a member of a professional massage organization. Regardless of where you buy your insurance, you can write it off. If your business account is charged services fees by your bank, those qualify as a business expense.

Assets include what you own; liabilities are what you owe. Your equity is essentially the balance difference when you subtract your total liabilities from your assets. IRS, “Estate and Gift Tax FAQs,” updated October 18, 2022, irs.gov/newsroom/estate-and-gift-tax-faqs. IRS, “Topic No. 556 Alternative Minimum Tax,” updated October 14, 2022, irs.gov/taxtopics/tc556. IRS, “Topic No. 506 Charitable Deductions,” updated January 13, 2023, irs.gov/taxtopics/tc506. IRS, “Topic No. 503 Deductible Taxes,” updated October 5, 2022, irs.gov/taxtopics/tc503.

First Things First: Keeping Good Records

Getting the training you need to become a massage therapist doesn’t come cheap, but you may be able to reduce your tax bill using the Lifetime Learning Tax Credit. This credit for higher education can provide a tax credit for up to $2,000, depending on your income level. However, the massage is subject to MinnesotaCare tax. When a business contracts with a massage therapist to provide massage bookkeeping for massage therapists services, the party who bills the customer is responsible for collecting and reporting the sales tax. In addition to licensing fees and professional association membership dues, you can deduct the cost of continuing education. If you use your vehicle for outcall massage, you can use either the standard or actual method to compute your automobile expense tax deduction, said Rosen.

• Items you use every day for massage sessions are business expenses.
• Self-employed taxpayers report all of their income, including tips, on Schedule C, Profit or Loss from Business.
• But, if you use the rug in your home, too, it’s considered a personal expense.
• If you offer massage therapy from your home, you can of course deduct home office expenses on your taxes.
• Two examples of items listed are payments for massage sessions and office supply expenses.
• For the most accurate financial records, you need to separate your business and personal expenses.

It’s important to make sure you take whatever deductions you’re entitled to so you can maximum 2018’s earnings. You can subtract the expense of business lunches with clients and consultants and any other meals you buy for work-related purposes. Most offices are independently owned and operated. Keep in mind, the information in this article was current as of January 6, 2022. Since COVID-19 relief efforts are fluid, please check with IRS.gov for up-to-the-minute information. Balance sheet—A financial picture of a business on a specific date with regard to assets, liabilities and equity.

Any refreshments purchased for the event and fliers to promote the event can be deducted, Ellis said. I hold a BS in Computer Science and have been a freelance writer since 2011. When I am not writing, I enjoy reading, watching cooking and lifestyle shows, and fantasizing about world travels.

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. You can write off your travel costs if your excursion or activity is strictly for business. The cost of transportation (vehicle, train, plane), lodging and food while on the road can all be counted as part of this category. Renewal of licensing requirements and registration of your massage practice is deductible. If you work as an independent massage therapist, you will need to fill out a Schedule C form.

You may, however, be able to deduct some trades while others will simply be taxable income. For example, if you trade massage therapy sessions for painting your office, you must include the cost of the massage as income and take the painting expense as a deduction. But if you trade for painting your house, you would declare the price of the massage you provide as income, but you cannot deduct the painting as it is for personal use, not a business expense. Statement of income and expense (also known as a profit and loss statement)—A summary of income and expenses for a specific period of time. Most cash-basis taxpayers keep books and file income taxes on a calendar year. The profit or loss is determined by subtracting deductible expenses from taxable income.

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. However, not all expenses can earn you a tax deduction. The IRS has a specific list that outlines what qualifies and what doesn’t. The list includes business expenses, medical and dental expenses, state and local taxes, mortgage points, and many others. You also may be able to deduct work-related, educational courses or seminars if they meet certain requirements.