Top 10 Tax Tips for Occupational Therapy Practitioners
By Stephanie Yamkovenko
It's that time of year again—W-2 forms are arriving in your inbox and tax preparation centers are popping up in previously unoccupied spaces. Get a head start on your taxes with our top 10 tax tips for occupational therapy practitioners. We talked to tax experts around the country for their occupational therapy–specific advice. Find commonly missed deductions, tips for per diem work, how to prepare now for next year's return, and more.
Disclaimer: These tax tips are provided to help guide occupational therapy practitioners, but they are not a replacement for professional advice. Be sure to have your tax returns reviewed by a professional to ensure that they are accurate.
An independent contractor
Tip 1: Deductions—How to report your work-related expenses
If you're an employee (i.e., you get a W-2 form from your employer), there are provisions in the tax code to allow for deductions of expenses specifically related to work on Schedule A line 21, according to William Slade, CFP, EA, founder of Slade & Co. "This area of the Schedule A allows tax payers to deduct work-related expenses that are not reimbursed by the employer." These expenses are subject to a 2% adjusted gross income floor, which means if all of your expenses are less than 2% of your adjusted gross income, you cannot deduct any miscellaneous expenses. Use the following formula to determine how much you can deduct:
Total Work-Related Expenses – (Adjusted Gross Income x 2%) = Actual deduction
Example: $4,000 expenses – ($75,000 income x 2%=$1,500) = $2,500 deduction
(e.g., you are a per diem occupational therapy practitioner, you receive a 1099-MISC form) is allowed to deduct the same expenses, but would file on Schedule C and is not subject to the 2% adjusted gross income floor.
Tip 2: Deductions—License, AOTA membership, and more
Many of the expenses you have for your job are tax deductible, whether you are an employee or an independent contractor. Occupational therapy practitioners can deduct the cost of their professional license, their American Occupational Therapy Association (AOTA) membership, and state association membership. Your AOTA dues may be tax deductible as a business expense—13% of your dues is allocated to lobbying efforts and is not tax deductible; 2% of membership dues is designated as a contribution to the American Occupational Therapy Foundation, Inc. (AOTF).
To read all 10 tips, click here. (AOTA Member login required.)
Not yet a member? Check out all the membership benefits (on top of the tax break!) here, and join now!