Taxes and the Massage or Bodywork Therapist
Plan Ahead for Tax Day to Prevent Costly Mistakes
Oct 19, 2009
Keeping track of money going in and out of a holistic business is a thorn in many practitioners’ sides. Helping people feel great and making a difference in the community is the forefront of a practitioner’s job. But the paperwork is a necessary evil, and in the long run can save a therapist a lot of money.
Sitting down with an accountant who has a customer base of wellness practitioners is a key step to understanding what receipts and papers need to be tracked. It can also set the stage for purchases and spending during that fiscal year, according to the business model the practitioner is following.
Organizing Massage Receipts and Paperwork
Tracking purchases and expenses year-round is critical, there’s no telling what could be forgotten or lost over the course of many months. Amy Elizabeth, tax preparer and licensed massage therapist, suggests using a 12-month accordion file to hold receipts. At the end of each month, the practitioner can enter everything into an accounting software program or a simple spreadsheet. The receipts are then dropped into the appropriate month in the accordion file.
By the year’s end, the file can be held onto for reference until the taxes have been filed. All of the papers can then be compiled and kept in the same envelope, box, or folder as the tax papers are stored in. Always store these papers in a safe, dry storage area that can be accessed should a question come up or an audit be requested.
Tracking Mileage for Mobile Bodyworkers
Determine what mileage, if any, can be deducted as a business expense for the mobile therapist. Then purchase a vehicle mileage log at the local office supply center. Entries are recorded on a daily basis including such information as:
- The date
- Description of the trip
- The odometer’s starting and ending mileage
- Whether this trip was for business or personal use
At the beginning of the year, the odometer is read to denote the starting mileage and again at the end of year to denote the end of the mileage for the year. If it is a new business, the mileage would be tracked from the date the business was opened through to the end of the year.
Equipment and Uniform Deductions for Massage Therapists
Most of the equipment and supplies for a massage or bodywork practice are allowable deductions. Definitely check with the accountant prior to large purchases to ensure that it is allowed by the IRS, though. In some cases, furniture and equipment will qualify for unique tax credits, such as certain electric lift massage tables that meet ADA compliance rules.
The IRS is rather particular about what qualifies as a uniform and meets the requirement to be a deductable allowance. IRS Publication 529 titled Miscellaneous Deductions outlines what clothing can be considered a deduction and which items do not meet the requirements. A general rule of thumb is if the clothing can be worn outside of the treatment room, it can’t be used as a deduction.
Should Wellness Practitioners Seek Tax Advice?
Absolutely! Seeing an accounting professional can save a practitioner a lot of money in the long run. If money is tight, consider looking for discount offers through trade associations or the local chamber of commerce. An independent tax professional with experience filing taxes for massage therapists and wellness practitioners can be an invaluable resource. But a visit to a more budget-friendly tax preparation service such as chain services like H&R Block®, Jackson-Hewitt® or the like are good options too.
Remember that not every two practitioners will operate their business the same way, so it is better to back up hearsay and tips from other therapists with an experienced tax professional.
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