According to a 2020 report from the US Bureau of Labor Statistics, 12 out of 20 of the world’s fastest-growing occupations are in the healthcare industry.
If you are a professional working in healthcare or are studying in a medical field and aiming to apply for a healthcare position soon, there are a few tax tips and breaks you should know about.
These breaks will allow you to save on your tax bills and preserve your savings when the end of the 2022 tax year rolls around.
Securing a position in healthcare requires many years of tertiary education. Luckily, there are many tax exemptions available to students in healthcare fields.
In the United States, students may qualify for American Opportunity Credits (AOCs), which offer credits of up to $2,500 per year per student during the first four years of their degree programs.
US students can also take advantage of the Lifetime Learning Credit. This credit offers 20% of their tuition fees back up to a threshold of $2,000.
Healthcare professionals in most countries can deduct work-related expenses from their tax bills. In your field, you could potentially deduct the costs of your uniforms and the cleaning costs thereof from your personal tax return. This is, however, only allowed if you wear your uniform exclusively for work and not for leisure as well.
Your work outfit needs to be specific to the work you do as a nurse, doctor, pharmacist, radiologist, and so on. For example, you can write off the costs of your lab coat, scrubs, and medical shoes when doing your taxes, but you cannot write off your wool coat, casual boots, or your Levi jeans.
You can claim back the expenses of having your professional uniform altered and cleaned. Report your laundry, dry cleaning expenses, and the costs of any alterations done to your uniform at the end of the tax year to save even more on your bill.
Basic medical supplies are usually exempt from tax. Any items such as medical equipment, protective gear, sanitizing supplies, swabs, gauze, cleaning detergents, and surgery equipment must get discounted from your tax bill. You will, however, need to declare these supplies.
The law requires most healthcare professionals to be licensed and to carry a valid license at all times. The good news is that you can write off the fees associated with obtaining and reapplying for your license as a tax exemption.
You can also write off the fees for your local business or practice operational license if you require one.
Since the Covid-19 pandemic struck in 2020, many healthcare workers have started working and consulting virtually from home. If you are working remotely because of the pandemic, you could apply for tax breaks for the costs of operating your home office.
Expenses like office phone lines, answering services, business mobile phones, and even internet connectivity can all be deducted—as long as they are being used for professional and not personal purposes concurrently.
Most doctors, nurses, and practitioners will already know that their everyday work equipment is exempt from tax. However, in many cases, these professionals can claim back the expenses of other unassuming items they may need for work purposes.
You may be able to claim back the costs of your work stationery, office supplies, business cards, and briefcase. Plus, your computer, printer, medical bag, and even business meals are potentially tax-deductible expenses too.
Many healthcare professionals pay significant fees to be part of industry-specific associations and groups. If you pay any alumni fees, medical association costs, professional association dues, or even union fees, these should all be exempt from tax.
Medical professionals’ work-related travel expenses might be tax-deductible. Costs like car rental, parking and toll fees, driven business miles, and airfare fall under this bracket. As do taxi and bus fees, travel lodging, and even meals during work-related travel.
If you use your personal vehicle for work, you could possibly claim back the costs of fuel, maintenance, repairs, and even car insurance.
Healthcare professionals who own real estate besides their primary residences should be aware that cost segregation allows for a rapid depreciation on those retail or rental properties, from 39 years to as few as five years. This acceleration of depreciation can offer notable tax savings for both passive and active incomes.
If you operate your practice from home, specific improvements made to your residence may also count as deductions.
Medical-related changes, such as the installation of wheelchair ramps, widening doorways, and modifying bathrooms and practice rooms, could be exempt from tax, provided that the costs are not unreasonable.
As always, charitable donations are exempt from tax for healthcare professionals and workers in any other industry.
Depending on your local tax laws, you may deduct expenses such as:
There are also several programs that offer tax incentives. Healthcare professionals can take advantage of these programs and reduce their tax bills considerably.
Healthcare professionals can save on their tax bills by claiming back the expenses of everything from their medical uniforms and equipment to their professional liability insurance costs.
Be sure to check the specific tax laws in your region and take advantage of the many deductions available to healthcare practitioners in your sector or field.