Benjamin Franklin taught us that there are two certainties in life: death and taxes. What is also certain, are the unavoidable complications that come from filing taxes, particularly for those who work on the road.
Traveling healthcare professionals often find themselves crossing over many state lines in a given fiscal year to conduct their business. And while this constant change of scenery can provide exciting opportunities and new challenges, it makes yearly duties to the IRS anything but simple.
The busy lifestyle of a traveling medical professional can be hectic, so managing taxes is often the last thing on one’s to-do list. Therefore it helps to be well planned, methodical and enlist help. In order to combat the ensuing complications that come with the chore of filing taxes, consider the following steps to enhance an otherwise taxing experience.
1. Track your expenses and keep records
This might sound tedious, but it’ll most likely pay off. Keeping detailed records of your receipts and other expenses will ensure a maximum return and you’ll be happy you didn’t toss anything when asked to provide proof.
A decade ago this meant slugging around a bag full of crumpled receipts, but thankfully technology has made things much simpler. Financial apps like Xero, Expensify, Clearbooks and Blinksale will be your best friend when keeping track of the many expenses incurred during the year. Most of these offer complementary iPhone and Android app that allow you to take photos of receipts on-the-go, and text-recognition capabilities that automatically create new records in your account.
If you’re running your own practice management software, it’s extremely beneficial to use a platform that integrates with a financial support software like Xero. This way your medical data and financial data is integrated from the get-go, eliminating administrative duties and giving you clear end of year reports for tax purposes.
2. Be mindful of all deductions
This is a big one; what the are you allowed to deduct on the road? Aside from the common deductions such as food, lodging, and general travel expenses, there are several other tax deductions that are often forgotten. After polling some traveling doctors, Mediq IQ uncovered the five most forgotten deductions.
- Union/membership fees: if you’re a member of the AMA or a similar organization, you are able to claim union/membership fees as they are related to your current occupation.
- Work-related car expenses: as you’re on the road, you are able to claim costs such as fuel, repairs, servicing, insurance, and registration.
- Mobile phone expenses: if you’re using your cellular phone for work calls, you can claim the cost of these calls as a deduction on your tax return.
- Home computer use: you are able to claim for the decline in value for your computer and for internet costs.
- Overall cost of managing your tax affairs: this includes preparation and lodgement of your tax return, travel costs for receiving tax advice, Administrative Appeals Tribunal appeals costs, valuations for deductible items, and interest paid to the ATO.
3. File your taxes on time
This might seem like an obvious one, but as it only occurs once a year, we thought we’d remind you. The real benefit is the increased speed at which you receive your return the earlier you file. No one likes to wait longer for money that is already theirs so if EOFY is on the horizon and you’ve yet to prepare your tax return, bump it up to the top of your to-do list.
4. When you’re not sure, ask
Whether you work with a staffing company, a private company, or maintain your own practice, it is always best to ask an expert. This reigns particularly true if you’re conducting work in a different state or region than your home office, as there may be different tax laws. Fortunately for us, many tax professionals work extended hours during tax season to ensure everyone is serviced. If it means earning the highest possible return and not upsetting the IRS, it’s worth asking a local expert!
If you still find your taxes intimidating, you’re not alone! We urge you to practice these tips year round, and rely on an expert to clear up any questions you have and help with the finishing touches. After all, working on the road can be taxing in itself, and you deserve the maximum return for your efforts.