5 Tax tips for Healthcare Workers
With income tax season fully upon us, it’s time to think about how you’re handling your own finances. If you’re in the healthcare industry, there are a couple of things you can do to save money come tax time.
5 Areas to of Focus for Taxes:
1. Keep track of education costs. Working in the medical field typically requires regular continuing education. Sometimes your place of employment will cover those costs, but often they come out of your own pocket.
2. Initial education: According to Mark Steber of Jackson Hewitt, “Your education may qualify you for an American Opportunity Credit (AOC), which allows a credit of up to $2,500 per year per student during the first four years of a degree program. If you don’t qualify for the AOC, you may qualify for the Lifetime Learning Credit, which allows a credit of 20% of tuition and fees paid to attend a college or trade school up to $2,000. If neither credit applies, then it is possible the course qualifies for the tuition and fees deduction. You can only use one of the credits or the tuition deduction, the IRS does not allow combining of the American Opportunity Credit, Lifetime Learning Credit, and tuition and fees deduction.” (https://www.huffingtonpost.com/entry/tax-tips-for-healthcare-p_b_10661312.html
3. Ongoing education: When it comes to deductions, the IRS is surprisingly lax in what they define as “education”. Typically, an expense will qualify if it passes one of two tests: 1) it is needed to maintain skills required for qualification in your employment or other trade or business or 2) it meets the express requirements of the individual’s employer or the requirements of applicable law, imposed as a condition to the retention by the individual of an established employment relationship, status, or rate of compensation.
4. Professional certifications can be deductions as well. If you completed your Enhanced Nurse Licensure Compliance (eNLC) or other licenses or certification requirements, check with your accountant. These usually qualify as education expenses and may be deducted on your taxes.
5. Save receipts for work related expenses. If you spend money on work-related expenses throughout the year, keep track of everything. A lot of what you pay out-of-pocket can be claimed on your income taxes. However, rules differ based on whether you’re self-employed or work for someone else.
If you are self-employed:
- Dues paid to professional organizations
- Lease or rent payments for your workspace
- Lease or rent payments for medical equipment
- Cost of equipment that’s useful life is less than 1 year
- Subscriptions to professional periodicals/journals
- Business entertainment expenses (if it’s directly related to the expansion of your business – for example, hosting a dinner for potential investors)
If you work for someone else:
- Uniforms/work clothes
- Work shoes
- Union dues
- Specialized equipment (such as stethoscopes or blood pressure cuffs) not already reimbursed by your employer
- Work-related travel expenses (outside of your normal commute)
- Education within your profession (like CE courses)
Of course, you should always check IRS.gov for all the latest changes and adjustments to income tax law. In addition, you can find some great resources at the NCSBN. If in doubt, always consult a professional accountant before making any tax-related decisions.