Show Notes

Welcome back to The Designer Practice Podcast, and I’m your host, Kayla Das.

In today’s episode, Margo Masri, owner of your Heartfelt CFO and Tax Services will share some therapist tax deduction tips from a US context.

Hi Margo, welcome to the show. I’m so glad to have you here today.

Thank you for having me. So excited to be here.

Margo, before we dive into today’s episode, please introduce yourself, where you’re from, and tell us a little bit about what you do.

I’m originally from New York, however, I just moved to New Jersey just under two years ago. I own and operate Heartfelt CFO and Tax Services, which was founded to help professional service-based business owners and specific mental health therapists to run and delegate their business from an efficient tax perspective along with high profit and leading edge around salaries and all of those things, and really just help you around knowing your right salaries, time off, and giving you a specific culture to follow so that you can have the practice of your dreams.

Amazing. I talk to a lot of therapists and one thing that I always hear is, oh, I’ll write that off. I’ll write that off. But what does that actually mean?

So think of tax write-offs as a way to take your income down at a proper level and from a legal standpoint. So it’s basically almost dollar for dollar on how you can calculate when you spend money for the business to actually not pay taxes on it.

However, there are an overarching ways to actually even more strategize to reduce your income, but think of tax deductions as a way that the IRS is actually helping you support to grow your business that legally is effective.

That’s helpful. So when it comes to writing it off I hear people with kind of two perspectives. Either one, like you mentioned not having to pay taxes on it. The other is that people have the perception that writing it off means it’s free. You don’t have to pay for it, you didn’t have to pay for it. It just goes away. Can you break that down and break any myths associated with that?

In some ways life is not free, but we want to think about that mentally. And I’m actually going to talk about a story that might bridge the gap between both of those. So I was talking about deductions with a legacy client of ours a few weeks ago, and he happened to just rattle off literally around things that he was doing in his house to uplevel so that he had a place to work from for the business and he was doing it side by side with a W2 job. So it’s your typical practice owner who is trying to transit from a regular W2 job and transition into the world of entrepreneurship.

He was just rattling off. He didn’t even like officially say we’re doing the basement. It was just almost like a gossip shmo update. And I said to him wait, what’s happening? And once he told me, I said, building a home office is actually really great because we could take the repairs and we can work through this. However, it might feel like it’s a big expense because you have to outlay, let’s say like $15,000, $30,000, whatever it is to build at that point was a basement, because now he actually is building gout, an actual space as well.

And he said to me. Oh, now I could tell my wife that she could do the backsplash or these other things that he didn’t want to do because it made him felt better around spending money. And I share this story because the lesson I like to share from this is that being comfortable to spend money on what you want to spend on is really the first area to look at.

So if you’re not comfortable spending money around something. Then don’t spend it. Because doing it for tax deduction purposes is not really going to make it better. Because in some ways it’s reducing your income. So it’s like somewhat free. But I also encourage you to look deeper into what does free mean and like why does that really resonate with you, versus really aligning on where you want your business to go.

And I’m actually going to give another story to clarify this even further. So I have a different client of ours and a lot of her steps was because of tax purposes, was because of tax deductions, was because of write-offs. And now when we began, she was like, I’m in a world of write-off decisions that I don’t even want.

Now she built the practice of her dreams, which is like two and a half on the way to 4 million maybe we’re like at the gap right now, where even in the Brinks of three it’s really up and up. So money is not the issue, it’s the structure around it that she really didn’t connect to. But because she didn’t connect to, she got stuck with all of this.

So bringing this back into what to focus on. I tell you back, think about the vision of where you want your business to go and work on being comfortable and even getting out of your comfort zone a little bit more around actually spending the money.

As a bonus, it’s the tax deduction. Don’t think of it as the place, as the be all to help you for the decision. Use it as like your bonus or like your whipped cream on the yogurt or ice cream, whatever have you, because you are stuck with that bill, regardless whether it’s a tax deduction or not, because the tax deductions go further into where it depends upon if you’re married. It depends upon if you’re single, you’re in the brink of a divorce or head of household. All of the multiples different ways of life that we run a household and actually live.

So at a surface level, do it because it aligns with what your vision is and use the tax write off system to now use it as a bonus.

Now, can you go further and can you actually challenge the system and get to a higher level? Yes, but you have to be comfortable still at any level with the tax code to spend money and let it work for you. So for instance, let’s say you’re buying a building. Let’s say you’re buying a. Let’s say you’re renting an office space, somehow there’s a comfort zone to rent an office space, because that’s where it protects your income. You can see clients one-on-one.

But if you want to spend around the structure around your money. We go on the plane, we’re trusting the pilot. We go into the store, we’re asking for coffee. We’re basically blindly trusting that we’re getting coffee and not some other rinky ding drink, right? That could actually put us in left field.

So I want to encourage you to really connect with where you’re going to make decisions and not it let the be all. And let’s say even if you spent the money, right? So let’s go back to the basement. So you spent the money. That’s actually your gift. That’s actually your bonus. That’s your upgrade, that’s your abundance, that’s your leveling up, growing your business into the vision.

Think about it. You walk on the street, you see all these businesses, they did a storefront that they built it, and that’s you doing the same thing. Let that vision of the upgrade of the abundance, and that’s all around you, take you.

And I want to conclude this area with one thing. It’s not where you are now. We have to make decisions from where we’re going and that’s where the vision is so important. And the sentence I want to really leave with this thought with you too, is be, do have, be the person, do the actions and you’ll have it.

And before you know it, you’re going to be on that mentality. And then that’s surrounding to have, be, do. To have it first. It doesn’t work that way. And that’s the shift that’s really important around this area. Am I harping on tax deductions and write offs and free and all of this other stuff because I’m avoiding what’s really needed inside me.

Okay? I’ve done that too when I was starting a business. However, it was really not a great place to be. The place to be was to dip inside and once I connected myself with the vision of where I wanted to go, which is helping you here today around tax. Making it less scary, less jargon, and helping you build the practice of your dreams and focus on your area of expertise.

And actually I’m going to go into another story. So yesterday I’m working with another client and he just came off the brinks of a huge spin of a big upgrade of income and it started to lead into a spiral of the next level. But he wasn’t ready for it because he was used to almost like the have, be, do, and not the be do have.

And once I made that shift to him and I said that to him, he was like, whoa. And when you think about that perspective of what’s needed from you, take it slow and meet yourself where you’re at because what’s meant for you is going to come no matter what.

I love that. That’s so great. And the be, do, have makes complete sense. I love that you share that with us today. I know one of the big questions, and I see it in social media groups all the time, are what can I deduct? What am I allowed to deduct? From your experience, what are some of the most common deductions therapists and private practice owners are able to claim?

There’s so much. Advertising, marketing your team. W2 workers, outside contractors, if you’re building an office, rent, space, development, further education for the team if you want to build out things. Your car expenses. Meals.

It’s pretty much close to anything that’s helping you build the business there is a way. However, the next level is having a tax strategy plan along with tax deductions, so it’s really going to elevate the return on the business. That’s the next level, because deductions without tax strategy is just really a regular calculation and it’s not the real money.

The real money is coupling it with tax strategy plan and looking at it. Okay. That’s why I combined tax planning with a business plan because it really goes hand in showing business owners how to together build the vision and how it’s going to help you financially so that retroactively you’re not thinking like, how do I get out of this situation? You’re planning in advance and getting comfortable with it, or you’re seeing it happen, or when something happens, you’re like, okay, I’m going to curate this. Instead of thinking my business is going down. So if there’s research development stuff around the car, hiring professionals, tax help, myself, my team actually things of that nature. If you need legal, all of those things of that nature. If you want to make a home office, these are a lot of the basic things. But if you want to build the right entity, choose the right support structure around you. People get a little bit technical where they want to go down to their socks. Unfortunately, that’s not really the code. However, benefiting with your expenses by taking I call one of the basic foundations, is to separate business and personal. You have wifi, buying desks, computer chairs, all of these things. But it still comes down into if you’re going to spend $300 bucks on a good chair or $50 because it’s cheap. So it’s getting comfortable spending the money, and then we get the bonus that it’s usually in a way a write off of some nature, but couple it with a plan.

Absolutely. You mentioned that pretty much anything can be a tax write off, but I also want to go back and talk about, you know, are there specific deductions that therapists should be careful with or that are commonly misunderstood as well?

So, it’s being careful around not using the tax law appropriately. That’s really what it comes down into. It’s taking the definition because you really wanna contest the law versus usually use the law as it is. I can be seen as a strict tax advisor by saying the law is the law. However, I see the beauty of the law for the long term. Then it is then to contest it.

And I’ll tell you a story. One of our legacy clients, he was buried in an S-corp. Like really just buried and inundated all of it when we met him and now he’s singing his praises where he knows how to elevate it, but he was buried into it because he didn’t really know how to operate it. And I say this to say is that align on the direction so that you know where you’re going in a way that makes sense still for the whole picture.

The thing is that with him, when he was buried in that structure, he didn’t really know where he was going overall. So once the connect the dots started with strategy and all of those things, and it came together, all of these pieces started to come together very easily.

Beyond deductions, what are some ways business owners can think more strategically about saving on taxes each year?

So saving on taxes. I would say the best way to think about it is really to look where you’re going and going to a plan. And the things to be careful for, bringing this back into the question before is are you filing together? Are you filing separate? We have one couple, I’ll be honest with you. For years they’re filing separate, and I’ve told them for four years. They’re in the mental health field. They both work independently. I’ve been telling them for four years, you guys would save so much money if you aligned together and.

Unfortunately till today they didn’t. However, I think as a couple, it made them independent on their relationship on why the decision was made. So it’s a really rough space to be in because the tax law sometimes gets into places where I’m going to call it inappropriate and at a level that it could intrude on life. And I see it so much.

And I say this to say is that the level of respect of following the code really just goes a long way further than trying to contest it. And it’s not that intentionally, I think people want to contest it. I feel like it’s coming from a place of where they’re not used to following the law. Like in the chat where, oh, I thought you could get away with this. I thought you could get away with that. Yeah, maybe. But until the day the letter comes, and it may not be today, but it’s something that eats at you. And I’m actually going to pull this in with a story.

So I have one client, when she started to work with us, it was all sorts of piles of mess. And there were things that she was not ready to step into, but the things that she wasn’t ready to step into was piling up. And she made decisions once she was aware of it, that in terms of the law that was really going to hurt her.

She didn’t want, it was stepping into her marriage, to her spouse and all of these things. And what ended up happening was the day came, they seized the bank accounts. So what I would say is stop procrastinating and stop avoiding, and the situation is what it is. It doesn’t define you, but it will define you if you continue to leave it on hold and freeze it and stop making it that’s the issue and putting it somewhere else when really as business owners, it’s ours, no matter where we want to feel, it might be of a blame or a shift.

I appreciate that story. What systems or habits can therapists do to stay organized with their deductions throughout the year? I know many therapists may have, bookkeepers, but a lot of the private practitioners are doing this on their own. So what can they do to better manage or keep track of their deductions?

Okay, love this question. I personally have developed now two new tools that I continue to enhance these every year, and I call them new tools and enhancing because after tax season, it really gives me an each season, I tell you, because we have the regular seasons and then the extension seasons. So for me, there’s four shifts of the year that I review and elevate this.

The first one is the nine foundations. So our nine foundations is accounts receivable, it’s accounts payable, separating business and personal. Learning how to save, learning how to do calendar reminders, and it goes into it there’s a depth around them and I have a video training around them.

The second tool is where I took the tax prep process. Which is the old school way of preparing for tax returns. And what does that mean? It’s a reactive way to go, year end and look back and really just total your income, learn your expenses of what’s going to align with the tax return.

Come to think of it if you’re looking at tax deduction and really also in this that you’re trying to understand, open up your tax return and just look at the Schedules C on your 1040. So 1040 is your personal return. That’s just the form of the tax, right? And look for Schedule C. And Schedule C is basically just the place of where itemizing your deductions.

Because if you didn’t have a separate entity level, what I want to share is that you’ll have a understanding of where you are at in the process. But what I did was I took the elevation of the tax law because over the years it has elevated and I built a nine-minute training around this process. So it will keep you very focused on the tax law to prepare for this and keep track of things, and it comes with a spreadsheet.

Now the main question around the spreadsheet is, why do I use yours and nobody else’s? Because I built it as a tax advisor. Do this 20 years. You don’t have to use mine. It’s the tool that I’m suggesting because it was built through the tax code, through the training, and I’ve shared my secret with you. I go over it. Four times a year.

So with these two tools, I would say it’s very important knowing your nine foundations and this tool, and then when you’re ready to have outsourced bookkeeping done, I suggest that because it’s an investment in yourself and in the business, which is going to give you peace for growth, and to master your numbers and give you peace for your family.

I love that. Margot, if listeners are interested in learning more about you, your services how can they reach out?

First off, thank you for listening and being up until this point in the podcast. I hope you learned and really took into account what I’ve shared today and implement something. Please find me on Social Margo Mastery, M-A-R-G-O-M-A-S-R-I. I have a Facebook page. We have an Instagram page as well, which is at Heartfelt CFO and send me a dm, send a message and let me know what you got from this and let me know if I can help you further and how to further develop clarity for you at any point of this as well.

So to check out Heartfelt CFO and Tax Services, head to heartfeltcfoandtaxservices.com/healthcare-industry.

Or you could simply scroll down to the show notes and click on the link.

Also, I’ve linked Margo’s Discovery call booking link in the show notes, so feel free to scroll down and click on that link if you’d like to book a discovery call.

Margo, thank you so much for joining us on the podcast today and sharing some therapist text deduction tips from a US context.

My pleasure. Thank you for having me.

And thank you everyone for tuning into today’s episode, and I hope you join me again soon on The Designer Practice Podcast.

Until next time. Bye for now.

Credits & Disclaimers

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