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Counseling the Counselors: What your Therapy Business Needs to Know About Taxes
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Therapy and counseling are invaluable services, and counselors make such a difference in clients’ lives that it’s hard to remember that they’re also operating a business. But if you’re a therapist it’s no surprise to you. With tax time right around the corner, now’s the time for a quick update on what you need to know about filing your income taxes. We’ve compiled some important tips to help make sure that your bookkeeping and accounting records are up-to-date and that you’re in compliance.Don’t Mix Your Business Accounts with Your Personal AccountsYou create a clear separation between your professional relationships with clients and your personal relationships, and you need to exercise the same discipline when it comes to your finances. That means keeping separate accounts — both banking and credit card — for your practice. You should be keeping track of business income and expenses too. It doesn’t matter whether you do this using an old-fashioned ledger book, an Excel spreadsheet, or any of the easy-to-use apps and software packages that are available, though we will point out that the latter makes it much easier to import information for tax prep. Be Sure to Pay Your Taxes – Quarterly and AnnualAll self-employed individuals are required to submit quarterly estimated income taxes, as well as additional self-employment taxes that make up for what others pay through employer-withheld payroll taxes. The due dates for these change each year depending on where weekends and holidays fall, but they are generally due mid-April, mid-June, mid-September, and mid-January. If you’re a sole proprietor your annual federal and state taxes are due April 15th, though if you’ve set yourself up as an S-corporation you’ll need to have them in a month earlier.Deductions and ExpensesKnowing which of your expenses are legitimate write-offs is one of the most challenging aspects of doing your own taxes. You know about office space, but what about any continuing education that you are pursuing in support of your continued expertise, or having to pay for childcare to allow you to see patients while your children are home? Determining whether an expense is legitimately in support of your practice requires a thoughtful approach. Here are a few tax deductions that you can feel comfortable including:Subscriptions and membership feesCosts of advertising and marketingFees you pay to credit cards or banks (for your business accounts)Meals and travel expenses associated with your businessFees to maintain your license and registrationContinuing education costsDepreciation of any office equipment or furnitureHome office expenses and suppliesLiability and malpractice insuranceFees paid to attorneys, accountants or other professionals in support of your businessOffice rent and utilitiesPersonal therapySoftware
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Tax and Financial Insights
by NR CPAs & Business Advisors
2026 IRS Mileage Rates: Key Updates and Insights
The IRS has rolled out the inflation-adjusted mileage rates for 2026, offering taxpayers an efficient way to claim deductions for vehicle-related expenses incurred for business, charity, medical, or moving purposes. These adjustments reflect the continued economic shifts impacting car operation costs.
Effective January 1, 2026, the new standard mileage rates are established as follows:
- Business Travel: Increased to 72.5 cents per mile, inclusive of a 35-cent-per-mile depreciation allocation. This marks a rise from the 70 cents per mile rate set for 2025
- Medical/Moving Purposes: Reduced slightly to 20.5 cents per mile, down from 21 cents in the previous year, reflecting the variable cost considerations.
- Charitable Contributions: Consistent at 14 cents per mile, a fixed rate unchanged for over a quarter-century.
As is typical, the business mileage rate considers the integral fixed and variable costs of automobile operation. Meanwhile, the medical and moving rates remain contingent on variable expenses as determined by the IRS study.
It is critical to note that the One Big Beautiful Bill Act (OBBBA) held firm on disallowing moving expense deductions except for specific cases within the Armed Forces and intelligence community, marking a substantial shift since 2017.
When engaging in charitable work, taxpayers might opt for a direct expense deduction over the per-mile method, covering gas and oil costs. However, comprehensive upkeep and insurance costs are non-deductible expenses.
Business Vehicle Use Considerations: Taxpayers can alternatively compute vehicle expenses using actual costs, which might benefit from shifting depreciation rules, particularly through bonuses and first-year advantages. Keep in mind, however, reverting from actual cost calculations to standard rates in subsequent years is restricted, particularly per vehicle protocol and when exceeding four vehicles in concurrent use.
Additionally, parking, tolls, and property taxes attributable to business can be deducted independently of the general rate, an often-overlooked advantage by many business owners.
Tax Strategies for Employers and Employees: Reimbursements based on the standard mileage framework, providing the right documentation is in place, remain tax-free for employees. Meanwhile, the elimination and continued prohibition of unreimbursed employee deductions continue, with particular exceptions offered to qualified personnel across specific occupations.
Opportunities for Self-employed Individuals: Entrepreneurs remain eligible for deductions on business-related vehicle use via Schedule C, with potential to account for business-use interest on auto loans.
Heavy SUVs and Deduction Advantages: Heavier vehicles exceeding 6,000 pounds but under 14,000 pounds open opportunities for substantial tax deductions through Section 179 and bonus depreciation avenues. The lifecycle of such a vehicle bears implications on recapturing initially claimed deductions, urging cautious tax planning.
For professional guidance on optimizing your vehicle-related tax deductions and understanding their implications on tax strategies, contact our office in Coral Gables, Florida, where expert advice and strategic insights are just a call away.
Educator's Deduction Reform: Key Changes Under OBBBA
The One Big Beautiful Bill Act (OBBBA) introduces significant enhancements for educators' tax deductions starting in 2026, offering both strategic opportunities and planning considerations for educators who qualify. With the reinstated itemized deduction for qualified unreimbursed expenses, educators have a broader spectrum of financial relief. This is complemented by the retention of the $350 above-the-line deduction, allowing educators to maximize their tax benefits by selectively allocating expenses between these avenues.
Understanding the nuances of these changes is crucial for educators and financial advisors alike. The dual-option deduction strategy can potentially enhance tax efficiency, thereby aligning with broader financial planning goals.
At NR CPAs & Business Advisors, based in Coral Gables, Florida, our expertise in tax preparation and planning provides invaluable support to educators navigating these changes. Our comprehensive approach, combined with personalized advice from our experienced team, ensures compliance and optimization in line with the latest tax legislations.
Given these updates, it is imperative to engage with seasoned professionals to fully leverage your deduction strategies. Contact us today to streamline your tax planning under OBBBA's new guidelines and maximize your deductions for upcoming tax years.
