Tax season can be stressful, especially for healthcare professionals balancing long shifts, multiple income sources, and student loans. With so much on your plate, it’s easy to make mistakes that could cost you money. Here are the top tax mistakes healthcare professionals make and how to avoid them.
Mistake #1: Missing Deductions
Many healthcare professionals miss out on deductions simply because they don’t realize they qualify.
- Work-related expenses – Scrubs, medical equipment, licensing fees, and continuing education costs may be deductible.
- Professional membership fees – If you’re part of a union or medical association, those fees could be deductible.
- Home office deductions – If you work remotely or run a side business, you might qualify for home office deductions.
How to avoid this mistake: Keep track of all work-related expenses and consult a tax professional to ensure you’re maximizing deductions.
Mistake #2: Filing Too Late (or Too Early)
Procrastinating on taxes can lead to penalties and unnecessary stress, but filing too early can also cause issues. If you file before all your tax documents arrive, you may need to file an amendment later.
How to avoid this mistake: Aim to file as soon as you have all necessary tax documents, but not before receiving forms like W-2s, 1099s, and student loan interest statements.
Tax deadline reminder: The 2024 tax deadline is April 15, so mark your calendar.
Mistake #3: Overlooking Retirement Contributions
Maximizing retirement contributions doesn’t just prepare you for the future, it can also lower your taxable income today. Contributions to 401(k), 403(b), or Traditional IRA accounts are tax-deductible, meaning they reduce your overall tax bill.
- 401(k) and 403(b): Contribute up to $23,000 for 2024, or $30,500 if you’re 50 or older.
- Traditional IRA: Contribute up to $7,000, or $8,000 if you’re 50 and older, depending on income limits.
How to avoid this mistake: If possible, contribute the maximum amount allowed before the tax year ends to take full advantage of tax savings.
Mistake #4: Not Factoring in Student Loans
If you’re still paying off medical or nursing school debt, your student loan repayment plan can impact your tax situation. Some repayment plans base payments on income, and certain types of loan forgiveness may count as taxable income.
- Deduct student loan interest – You may be able to deduct up to $2,500 in interest paid on student loans.
- Understand tax implications of forgiveness programs – Public Service Loan Forgiveness (PSLF) is tax-free, but other forgiveness programs might not be.
How to avoid this mistake: Review your repayment plan and tax deductions with a financial expert to make sure you’re not overpaying.
Mistake #5: Skipping Professional Help
While DIY tax software can work for simple returns, healthcare professionals with multiple income sources, side gigs, or student loans may benefit from professional tax help.
A tax professional can help you:
- Find deductions you may have overlooked
- Ensure you’re filing correctly for multiple income streams
- Reduce your risk of an IRS audit
How to avoid this mistake: Consider working with a tax professional, especially if your financial situation is complex. The cost of professional help could be much less than what you save in deductions and tax credits.
How Befit Financial Can Help You Plan for Next Year
At Befit Financial, we’re committed to helping healthcare professionals build a strong financial future. We offer:
- High-yield savings accounts to help you prepare for tax season
- Financial planning resources tailored to healthcare workers
- Expert advice on managing student loans, retirement contributions, and more
Tax season doesn’t have to be stressful. Contact us today or visit our website to explore financial tools designed just for healthcare professionals.
