The Intake

Insights for those starting, managing, and growing independent healthcare practices

Essential tax planning strategies for medical practice owners

Tax planning helps you minimize stress, prevent filing issues, and support business growth and personal savings goals.

Last updated on 04/14/2025
tax planning for private practice

At a Glance

  • Document expenses, deduct wisely, and use write-offs to reduce your tax burden.
  • The right business structure can lower taxes and reduce self-employment tax.
  • Partner with physician-focused pros for smart tax planning and fewer filing mistakes.

Most of us anticipate some extra stress during tax season. After all, filing late or incorrectly can result in audits, penalties, or simply missing out on savings — or valuable deductions. Proactive tax planning for your medical practice not only helps avoid these pitfalls but also improves your cash flow, maximizes legitimate deductions, and supports both business growth and personal savings goals.

"As a private practice owner, effective tax planning is vital to maintaining the financial health of your practice. It's important to stay informed about the latest tax regulations and leverage strategies such as retirement plan contributions, healthcare expenses, and business deductions," Dr. Soma Mandal, internal medicine specialist, says.

As a private practice owner, effective tax planning is vital to maintaining the financial health of your practice.

Here’s what you should know about preparing taxes for doctors and how tax planning can help you out in future years.

Free download

Essential tax documents for physicians who own their own practice

Properly filing taxes for doctors requires the correct documentation. The following are the most common documents for private practice taxes.

Business income records

These records reflect your practice’s financial performance:

  • Profit and loss statement (P&L): A detailed financial report showing profit or loss for the tax year
  • Balance sheet: A summary of assets, debt, and equity at a specific time
  • Bank statements: Records showing all bank transactions over a specific period

Business tax forms based on entity type

The forms required for private practice taxes depend on the structure of your business.

Sole proprietors and single-member LLCs

Partnerships and multi-member LLCs

S corporations

C corporations

  • Form 1120: Report business income, deductions, and P&L

Expense and deduction documentation

Document these common expenses with receipts, invoices, and bank or payroll records:

  • Office rent
  • Payroll
  • Medical supplies
  • Insurance
  • Continuing medical education (CME)
  • Marketing
  • Equipment and software
  • Professional services (legal, accounting)

Estimated tax payment records

Receipts, confirmation emails, or Internal Revenue Service (IRS) account transcripts document quarterly tax payments.

Business loan and interest documentation

Document business loan or credit payments with monthly statements and year-end interest summaries from lenders.

Home office deduction records (if applicable) 

If your home office qualifies, provide the square footage and utility bills, mortgage statements, or rent records.

Health savings account (HSA) and medical expense deduction records

Receipts for HSA reimbursements and medical expenses paid with an HSA card.

Key tax deductions for doctors

Are scrubs a tax write-off? Yes, along with other supplies. The following tax write-offs for medical professionals are fully deductible in most cases and can help to reduce your tax burden.

Office rent, lease, and utilities

Rent or mortgage payments and utilities like electricity, water, and internet.

Medical equipment and office supplies 

Scrubs, gloves, stethoscopes, exam tables, and office items like computers, printers, and paper.

Employee payroll and benefits

Staff wages, salaries, employee health insurance, and retirement contributions.

Malpractice and liability insurance premiums

Deduct payments for policies that protect against liability or malpractice claims. 

CME courses and conferences

Continuing education costs, including registration fees, travel, and lodging. 

Marketing, advertising, and website expenses

Expenses for website design, digital advertising, business cards, brochures, and other promotional materials.

Student loan interest deductions (if applicable)

If eligible, doctors may deduct interest paid on student loans, although income limits may apply.

Home office deductions for telemedicine providers

Rent, utilities, and internet may be deductible for a home office used for virtual visits.

Tebra's EHR+ is an ONC-certified all-in-one platform built for private practices. Learn more.
Optimize your practice
Unlock the secrets to building a profitable and sustainable healthcare practice with our ebook on optimizing operations and increasing margins.
Free resource

Tax loopholes for doctors to reduce tax liability

Examples of legal tax loopholes for doctors include:

Maximizing HSAs for tax-free medical expenses

HSA benefits include tax-deductible contributions and tax-free interest and withdrawals.

Retirement account strategies

Consider retirement savings options, such as:

  • SEP IRA: An IRA that allows contributions of up to 25% of your income 
  • Solo 401(k): Ideal if you have no employees (or just your spouse), with larger contributions than SEP-IRA
  • Defined benefit plans: Have the highest maximum contributions, provide a fixed, guaranteed benefit after retirement

Real estate investment tax benefits

Reduce your overall tax burden with real estate-related options:

  • A depreciation deduction on qualifying business or rental properties
  • 1031 exchanges let you defer capital gains taxes when you sell an investment property if you reinvest in a similar property

S corp election benefits for self-employed doctors 

An S corp reduces self-employment taxes; only part of business income is considered your salary, classifying the rest as distributions. 

Using business structure advantages 

Business structure determines how income is taxed, deduction eligibility, and profit distribution.

  • Limited liability company (LLC): The entity itself isn’t taxed, and the owner claims the profits on their personal tax return. 
  • S corp: Profits are split between salary (business pays payroll tax) and distributions (not included under self-employment tax)
  • C corp: Taxed at the corporate level and as dividends; offers a range of deductions and benefits

Physician tax solutions: Making tax season easier

Wondering if a CPA or financial software is worth it? Yes, the right support can help simplify private practice taxes.

The value of hiring a CPA or tax advisor specializing in medical practices

A specialist understands medical practice operations, knows applicable tax laws, and helps maximize deductions to increase savings. "Collaborating with a knowledgeable tax professional can help identify opportunities to optimize your tax situation, ultimately allowing you to reinvest savings back into your practice and enhance patient care," Dr. Mandal says.

Collaborating with a knowledgeable tax professional can help identify opportunities to optimize your tax situation.

Having a tax advisor can help reduce the risk of penalties and audits. In the event that you do face an audit, many tax advisors can represent you before the IRS — providing peace of mind.

How accounting software can help

Accounting software like QuickBooks or Xero can:

  • Track earnings and expenses
  • Generate reports
  • Create accurate tax records
  • Provide back-up if you’re audited

How a financial planner can help with long-term tax strategy

A financial planner provides big-picture advice that helps you:

  • Align tax planning with your goals
  • Maximize tax advantages 
  • Plan for capital expenditures
  • Make important financial decisions

Professional financial planning offers strategic ways to reduce your taxable income while maximizing your long-term financial well-being and aligning with your practice goals.

Planning for next year’s taxes

To boost savings and avoid stress next year:

  • Make quarterly estimated tax payments on time to avoid penalties
  • Review and optimize your business structure for maximum tax efficiency
  • Implement a system to keep financial records organized year-round
  • Consider tax implications as part of making major decisions

Quick tax planning checklist 

Use this tax planning checklist to stay on track:

  • Use the correct IRS forms and schedules
  • Include proper documentation
  • Research deduction eligibility
  • Maximize retirement account contributions
  • Leverage business structure advantages
  • Take advantage of digital support options

If you have concerns, seek guidance from a tax professional. They’ll help you optimize your return and ensure your strategy aligns with your personal and business objectives.

Free report

You Might Also Be Interested In

Are manual processes limiting your growth? Get actionable steps to eliminate administrative burdens with Tebra’s free guide to practice automation.

Stay Ahead with Expert Healthcare & Billing Insights

Get the latest industry updates, financial tips, and expert strategies — delivered straight to your inbox.

Amantha May, freelance healthcare writer

Amantha May is a freelance healthcare writer specializing in health tech, primary care, and health equity. She has written for a large range of clients, including medical equipment manufacturers, large health systems, digital health entrepreneurs, and private practices.

Reviewed by

Soma Mandal, MD

Dr. Soma Mandal is an ABMS board-certified internal medicine physician. She specializes in women’s health with an active practice in New Jersey. She obtained her MD from New York University School of Medicine, and has been listed on Castle Connolly’s top doctor lists in both New York and New Jersey for several years.

Stay Ahead with Expert Healthcare & Billing Insights

Get the latest industry updates, financial tips, and expert strategies — delivered straight to your inbox.