Many doctors earn salaries that force them into the highest tax bracket. Highly paid doctors are also unable to qualify for common tax benefits available to taxpayers with lower incomes, such as the earned income credit. However, doctors can qualify for several other tax benefits related to their profession.
Equipment and Supplies
If you own a practice or work as an independent contractor for several hospitals and clinics, you can deduct medical equipment and supply purchases from your taxable income. When you purchase disposable supplies, such as rubber gloves, you can deduct the cost of the items directly from your business income for the year on Schedule C of Form 1040. However, if you purchase items that you can use for longer than one year, such as imaging equipment, you must depreciate the asset's value over the number of years it is expected to be useful. Depreciation should appear on Schedule C as well.
If you operate an independent practice, you can deduct costs associated with running the practice from your business income on Schedule C. Qualifying expenses include rent paid for the use of business property, utility bills and insurance. If you also conduct business in your home, you can deduct a portion of your utility bills and insurance as a business expense. However, to qualify for the home office tax deduction, you must use your office only for business activity.
If you own your own practice and pay for malpractice insurance, you can deduct these premiums from your business income. You can also deduct the cost of health insurance for yourself, your family and your employees. As with other business expense deductions, you can claim deductions for insurance on Schedule C.
Doctors often leave medical school with substantial student loan debt. If you are making payments on student loans, you can deduct up to $2,500 of the interest you pay during the year from your taxable income on Form 1040. You can claim this deduction regardless of whether you itemize.
Doctors often spend time traveling to medical conferences and seminars during the year. If you work as an employee, you can deduct these costs from your taxable income on Schedule A of Form 1040. If you own an independent practice, you can take travel deductions as business expenses on Schedule C.
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