Therapy Practice Year-End Tax Checklist: 15 Things to Do Before December 31, 2026

This therapy practice year-end tax checklist is designed to help private practice owners close out the year without leaving deductions, retirement opportunities, or bookkeeping problems on the table. December gets busy fast when you own a therapy practice.

You’re managing clients around the holidays, handling cancellations, trying to take some time off, wrapping up documentation, and maybe attempting to remember whether you bought your staff holiday gifts yet.

Taxes probably aren’t at the top of your list. But they should at least make the list.

Year-end tax planning for therapists can make a significant difference in both your tax bill and how stressful the upcoming tax season becomes. The key word here is planning.

There is a major difference between tax preparation and tax planning. Tax preparation happens after the year is over. At that point, your accountant is largely reporting what already happened. Tax planning happens while you still have time to make decisions.

Before December 31 arrives, use this therapy practice year-end tax checklist to make sure your private practice isn’t overlooking deductions, retirement opportunities, bookkeeping problems, or other financial issues that could cost you money.

1. Make Sure Your Bookkeeping Is Actually Up to Date

Before you make any tax decisions, you need accurate numbers.

That means your bookkeeping should be reconciled through at least November before you start serious year-end planning.

Look for:

• Missing transactions
• Duplicate transactions
• Uncategorized expenses
• Personal expenses accidentally paid from the business
• Business expenses accidentally paid personally
• Outstanding invoices
• Unrecorded reimbursements
• Incorrect income classifications

Your accountant can’t give you meaningful tax planning advice if your books say you’ve made $140,000 when you’ve actually made $210,000.

Accurate bookkeeping is the foundation of year-end tax planning.

2. Review Your Profit Before December 31

Don’t wait until April to find out how much money your therapy practice made.

Before year-end, estimate your:

Revenue – Business Expenses = Approximate Business Profit

Why does this matter? Because many important tax decisions depend on your expected annual income. For example, your profit may affect:

• Estimated taxes
• Retirement plan contributions
• Entity planning
• Equipment purchases
• Deduction strategies
• Cash-flow planning

If your therapy practice grew significantly this year, your tax situation may look very different from last year.

3. Review Your Estimated Tax Payments

Self-employed therapists generally don’t have an employer withholding federal income tax from every paycheck. Instead, many private practice owners make quarterly estimated tax payments.

Before year-end, compare what you’ve paid versus what you’re projected to owe.

If your practice grew significantly during 2026 but you’re still making estimated payments based on your old income, you could be heading toward an unpleasant surprise. Don’t wait until tax season to discover it.

Ask your accountant whether your estimated tax payments are still appropriate based on your actual year-to-date income.

4. Find the Business Expenses You Paid Personally

This is one of the easiest therapist tax deductions to miss.

Maybe you bought a clinical book using your personal Amazon account. Or paid your licensing renewal from your personal checking account. Or registered for a conference using a personal credit card.

Those expenses don’t automatically stop being business expenses simply because you used the wrong card.

Review personal accounts for legitimate business purchases such as:

• CEUs
• Licensing fees
• Professional memberships
• Clinical books
• Office supplies
• Practice software
• Marketing expenses
• Training
• Business travel
• Professional consultation

Then make sure they’re properly recorded in your bookkeeping.

5. Review Your Continuing Education Expenses

Therapists spend a lot of money maintaining their professional skills.

Before year-end, review your:

• CEUs
• Ethics training
• Clinical workshops
• Conferences
• Online training subscriptions
• Books
• Required course materials
• Professional consultation
• Qualifying certification programs

Don’t forget the expenses surrounding the education. A $700 conference could also involve airfare, hotel, parking, rideshare, mileage, books, course materials, and certain qualifying travel expenses. Those costs can add up quickly.

6. Review Your Professional Subscriptions

Subscription creep is real. Therapy practices can accumulate dozens of monthly charges without realizing how much they’re spending.

Review expenses for:

• EHR software
• Telehealth software
• Scheduling platforms
• HIPAA-compliant email
• Cloud storage
• Accounting software
• Payroll software
• Psychology Today
• Professional directories
• Website hosting
• Domain registration
• Canva
• Zoom
• Microsoft 365
• Google Workspace
• Continuing education platforms

There are two reasons to do this. First, make sure legitimate business subscriptions are properly categorized as expenses. Second, cancel the subscriptions you aren’t actually using. A tax deduction doesn’t make an unnecessary expense free.

7. Review Your Home Office Deduction

If you operate part or all of your therapy practice from home, determine whether you qualify for the home office deduction.

Generally, the IRS requires qualifying space to be used regularly and exclusively for business. Telehealth therapists may have a particularly strong reason to review this deduction.

Depending on your situation, qualifying home office expenses could involve a portion of costs such as rent, mortgage interest, utilities, homeowners insurance, repairs, property taxes, and other eligible household expenses.

There are also simplified and actual-expense methods for calculating the deduction. Don’t automatically assume you don’t qualify simply because you also see clients somewhere else.

8. Make Sure You’ve Tracked Your Business Mileage

Trying to recreate twelve months of driving from your calendar in April is miserable. Do it now.

Therapists may have business mileage associated with activities such as traveling between practice locations, driving to professional training, conferences, business banking, office supply purchases, qualifying business errands, and certain off-site meetings.

However, normal commuting between your home and regular workplace generally isn’t deductible business mileage. Mileage rules can also interact with whether your home office qualifies as your principal place of business.

If you haven’t maintained a mileage log, start reviewing your records before the year ends.

9. Review Equipment You Actually Need

Year-end doesn’t mean “go buy random stuff so I can write it off.”

Spending $5,000 unnecessarily to save a fraction of that amount in taxes still leaves you with less money.

But if your practice genuinely needs equipment, year-end is a good time to discuss timing with your accountant. Potential purchases might include computers, monitors, office furniture, therapy furniture, printers, tablets, phones, office equipment, and telehealth equipment.

Depending on the asset and circumstances, different depreciation or expensing rules may apply. The important rule: don’t let the tax deduction create the purchase. Let an actual business need create the purchase. Then determine the most tax-efficient way to handle it.

10. Review Your Retirement Contributions

Retirement planning is one of the most powerful tax-planning areas available to many private practice owners.

Depending on your business structure and whether you have employees, options may include a SEP IRA, SIMPLE IRA, Solo 401(k), traditional 401(k), profit-sharing plan, or other qualified retirement plans.

For 2026, the general employee elective-deferral limit for many 401(k) plans is $24,500, before applicable catch-up contributions. The overall defined-contribution limit is generally $72,000 for 2026, although the amount an individual can actually contribute depends on compensation, plan structure, employer contributions, and other rules.

Practice owners age 50 or older may also have additional catch-up contribution opportunities.

Retirement plans can get complicated quickly, especially for group practices with employees, so this is not something to set up blindly based on social media advice. Talk with your tax professional and financial advisor before year-end.

11. Group Practices: Look at the Small Employer Retirement Plan Tax Credit

This is one therapy practice tax credit worth putting on your radar.

Eligible small businesses that establish certain new retirement plans may qualify for federal tax credits associated with startup and administrative costs.

Under current rules, certain eligible employers with 50 or fewer employees may qualify for a credit equal to 100% of qualifying startup costs, subject to applicable limitations. Additional credits may also be available for certain employer contributions.

That can make offering a retirement plan significantly more attractive for a growing group practice.

If you’ve been considering adding retirement benefits for employees, don’t wait until tax preparation season to bring it up. Ask your accountant and retirement-plan provider whether your practice qualifies.

12. Review Contractor Payments and 1099 Information

Did you pay contractors during 2026? Think about virtual assistants, marketing consultants, freelance designers, website developers, bookkeepers, consultants, and other independent service providers.

Depending on how much you paid, how you paid them, and what type of entity they operate, your practice may have information-reporting requirements.

Don’t wait until January to discover you’re missing everyone’s tax information. Before year-end:

• Review your contractor list.
• Make sure you have completed W-9s where appropriate.
• Verify names.
• Verify addresses.
• Verify tax identification information.
• Confirm how much each contractor was paid.

January becomes much easier when you clean this up in December.

13. Review Payroll Before the Final Payroll Run

If you’re an S corporation owner or operate a group practice with employees, year-end payroll deserves special attention.

Review owner wages, employee wages, bonuses, benefits, retirement contributions, payroll tax deposits, reimbursements, health insurance treatment, and other taxable benefits.

For S corporation owners in particular, don’t discover after December 31 that your payroll strategy wasn’t implemented correctly. Talk with your accountant and payroll provider before the final payroll of the year.

14. Review Your Business Entity

As your therapy practice grows, the business structure that made sense when you earned $40,000 may not make sense when you’re earning $200,000.

Year-end planning is a good time to ask:

• Should I remain a sole proprietor?
• Does an S corporation election make sense?
• Is my current S corporation still beneficial?
• Is my payroll appropriate?
• Is my group practice structured efficiently?
• Do I need separate entities for different activities?

Important: an LLC does not automatically create an S corporation. “LLC” is a legal entity designation. S corporation status is a federal tax election. Therapists frequently confuse the two.

Entity changes should be based on the full financial picture, not a TikTok video promising that an S corp automatically saves everyone thousands of dollars.

15. Schedule a Tax Planning Meeting BEFORE Tax Season

This might be the most important item on the entire therapy practice year-end tax checklist.

Don’t ask your accountant “how can I save money on taxes?” in March. By then, many planning opportunities tied to the previous calendar year may already be gone.

Instead, schedule a year-end tax planning meeting and ask:

• What is my projected taxable income?
• Am I on track with estimated taxes?
• Are there deductions I’m missing?
• Should I make additional retirement contributions?
• Is my entity structure still appropriate?
• Do I need to adjust payroll?
• Are there legitimate expenses I should accelerate?
• Should any income or expenses be handled differently?
• What should I do before December 31?
• What should I prepare for next year?

Tax planning should happen before the decisions need to be made. Tax preparation tells you what happened. Tax planning helps influence what happens next.

Bonus: Build Your Tax Folder Before January

Give your future self a gift.

Create a folder labeled “2026 TAX DOCUMENTS.” Then start adding:

• Bank statements
• Credit card statements
• Payroll reports
• Retirement contribution records
• W-9s
• Contractor information
• Equipment purchases
• Mileage records
• CEU receipts
• Home office information
• Estimated tax payment confirmations
• Loan documents
• Insurance records
• Major purchase receipts

When tax season arrives, you won’t have to hunt through twelve months of email.

Year-End Tax Planning Example for a Therapist

Consider two therapists with identical practices.

Both generate $250,000 in revenue and initially show $150,000 in business profit.

Therapist A waits until March to speak with their accountant.

Therapist B meets with their accountant before year-end. During that review, Therapist B discovers:

• $3,000 of legitimate business expenses paid personally that weren’t recorded
• $2,500 of overlooked CEU and conference-related expenses
• Unrecorded qualifying business mileage
• A retirement contribution opportunity
• Estimated tax payments that need adjustment

The goal isn’t to invent deductions. It’s to make sure the financial records accurately reflect what actually happened and to make informed decisions while there’s still time to make them.

That’s what year-end tax planning is about.

Frequently Asked Questions

What should therapists do for taxes before year-end? Start by making sure your bookkeeping is current, estimating annual profit, reviewing estimated tax payments, identifying missing deductions, reviewing retirement contributions, checking contractor records, and meeting with your tax professional before December 31.

What tax deductions should therapists review at year-end? Common areas include CEUs, licensing fees, professional memberships, EHR software, telehealth expenses, marketing, website costs, professional liability insurance, business mileage, home office expenses, professional consultation, and other ordinary and necessary practice expenses.

Should therapists buy equipment before December 31 for a tax deduction? Only if the business actually needs it. Certain equipment purchases may qualify for accelerated deductions or depreciation, but spending money solely to create a deduction generally isn’t good financial planning.

Can therapists deduct retirement contributions? Depending on the retirement plan, business structure, compensation, and other factors, contributions may provide tax advantages. Self-employed therapists have several potential retirement-plan options, including SEP IRAs and individual 401(k) plans.

Does an LLC save therapists money on taxes? Not automatically. An LLC is a legal structure and doesn’t, by itself, determine federal tax treatment. An LLC can potentially be taxed in several different ways depending on elections and ownership.

Should a therapist become an S corporation? Maybe, but not automatically. Whether an S corporation election makes sense depends on profit, payroll, reasonable compensation, administrative costs, state taxes, retirement planning, and other factors.

When should therapists meet with their accountant for year-end tax planning? Ideally, before the final weeks of the year. Waiting until tax preparation season may eliminate opportunities that required action before December 31.

Your Therapy Practice Year-End Tax Checklist

Before December 31:

• Reconcile bookkeeping
• Estimate annual practice profit
• Review estimated tax payments
• Find business expenses paid personally
• Review CEU and certification expenses
• Audit business subscriptions
• Review home office eligibility
• Update mileage records
• Review necessary equipment purchases
• Review retirement contributions
• Investigate small-employer retirement credits if applicable
• Collect contractor W-9 information
• Review payroll
• Review business entity structure
• Meet with your accountant for proactive tax planning

The Bottom Line

The best therapy practice tax strategy usually isn’t finding one magical deduction in April.

It’s consistently tracking expenses, maintaining accurate books, understanding your practice’s financial performance, and making tax decisions before deadlines pass.

For therapists and group practice owners, year-end is one of the best opportunities to review the entire financial picture.

Are your estimated taxes sufficient? Are you missing deductions? Could retirement contributions improve your tax position? Has your practice outgrown its current entity structure? Are your books actually accurate?

Those are questions worth answering before December 31, not when you’re already filing the return.

A CPA who understands therapy practices can help you move beyond simply filing taxes and start planning around the financial decisions that actually affect your practice.

Related Therapy Practice Tax Guides

• Top 25 Most Overlooked Therapy Practice Tax Deductions in 2026 — Review commonly missed deductions for therapists and group practice owners.
• Can Therapists Deduct Their Own Therapy? IRS Rules Explained — Understand the difference between personal therapy expenses and deductible professional expenses.
• Home Office Deduction for Therapists in 2026 — Learn when a home therapy office qualifies and which expenses may count.
• Are EMDR, Gottman & Other Therapy Certifications Tax Deductible? — Learn how IRS education rules apply to advanced clinical training.
• Therapist CEU Tax Deductions: What Counts and What Doesn’t — A detailed guide to continuing education, conferences, training, travel, and related expenses.
• Deducting Vehicle Expenses as a Therapist: Mileage vs. Actual Expenses — Learn when therapist driving becomes business mileage and which deduction method may make sense.

Sources

• IRS — Deducting Business Expenses — https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses
• IRS Publication 334 — Tax Guide for Small Business — https://www.irs.gov/publications/p334
• IRS Publication 560 — Retirement Plans for Small Business — https://www.irs.gov/publications/p560
• IRS — Retirement Plans Startup Costs Tax Credit — https://www.irs.gov/retirement-plans/retirement-plans-startup-costs-tax-credit
• IRS — 401(k) and Profit-Sharing Plan Contribution Limits — https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits
• IRS Publication 463 — Travel, Gift and Car Expenses — https://www.irs.gov/publications/p463
• IRS Publication 587 — Business Use of Your Home — https://www.irs.gov/publications/p587

Disclaimer: This article provides general educational information and isn’t individualized tax, legal, investment, or accounting advice. Tax rules and deadlines vary based on the taxpayer, business structure, state, retirement plan, and other circumstances. Consult a qualified tax professional regarding your specific therapy practice.