Year-End Tax Checklist for Therapists With a Private Practice

You have about two months left in the year, and a few money decisions get much harder to make once it's January. This is a short year-end checklist, and yes, it's mostly about taxes. There are three steps: how much your practice actually made (your profit), whether to start a retirement plan, and when your last tax payment of the year is due. Between full caseloads and holiday scheduling, these tend to get pushed to "later." The good news is that three quick steps, done this month, can save you real stress come tax season.

This post is for therapists, psychologists and other mental health clinicians who own a practice, whether it's solo or a small group. It's also for 1099 contractors, meaning clinicians who work with another practice but are paid without taxes taken out, so you handle your own taxes. If you're an employee at someone else's practice, meaning you get a regular paycheck with taxes already taken out (that's a W-2 employee), most of this doesn't apply to you yet because your employer handles it. Bookmark it for the day you open your own practice or go independent.

Step 1: Know your profit so far, not just your revenue

Here's a question I ask almost every clinician I meet: "What's your profit this year?" Most can tell me what they've brought in. Far fewer can tell me what's left after expenses.

Revenue is everything your clients paid you. Your expenses are what you pay to run the practice: rent, your EHR, liability insurance, billing, continuing education, professional dues. Profit is what's left after those expenses, and it's the only part that's actually yours. Say you've brought in $250,000 so far and spent $70,000 on those expenses. Your profit is $180,000. That's the number your taxes are built on, and it's the number that decides how much room you have for the next two steps.

Your task this week: pull your profit-and-loss report (a simple summary of money in and money out, which your bookkeeping software can produce) and find one number: profit so far. If you don't have a report, start with your business bank account and business credit card (the ones where client payments come in and practice bills go out) and add up what came in and what went out since January 1.

Step 2: Decide whether a retirement plan makes sense this year

A retirement plan for your practice is an investment account you set up to save for retirement, and it comes with a tax break. With the kind we're talking about here (called pre-tax), the money you put in isn't taxed this year. It's taxed later, when you take it out in retirement. So if your profit is $180,000 and you put $30,000 into a plan, your income tax this year is figured on about $150,000 instead. You're not losing that money. You're paying yourself first and postponing the tax bill. The tradeoff is that the money is meant to stay put: if you take it out before about age 59½, you'll generally owe a penalty on top of the tax.

Some plans also offer a Roth version, which works in reverse: no tax break now, but the money comes out tax-free in retirement. This post focuses on the pre-tax kind because that's the one that lowers this year's taxes.

If you have real profit and no retirement plan for your practice, now is the time to decide, well before December 31. Two plans come up most often for people who work for themselves with no employees (that includes 1099 contractors):

• SEP IRA. The simpler of the two. You open it at a brokerage firm, and you choose how the money is invested, but it's a special retirement account with its own rules. You make the contribution yourself, as the owner of the practice, from your practice's earnings. The big advantage is timing: you don't need to do this by December 31. You can generally open it and put money in for 2026 as late as the day your tax return is due, which is April 15, 2027 (or October 15, 2027 if you file an extension). If your practice is an S corp, those dates are earlier: March 15, or September 15 with an extension. In 2026 you can put in a percentage of your income, up to $72,000.
• Solo 401(k). Usually lets you save more, especially at moderate incomes. Here's why: it lets you put money in wearing two hats. As the person doing the work, you can save part of your own pay (up to $24,500 in 2026, plus $8,000 more if you're 50 or older). As the owner of the practice, you can then add a percentage of the practice's profit on top of that. Together, the total can't go over $72,000. The catch is timing: the first part (your own pay) generally has to be set up by December 31, while the second (the practice's share) can wait until your tax return is due. Plan providers differ on what they allow if you open one late, so ask yours.

If you have employees: the rules change. If you open a SEP IRA, you generally have to put in the same percentage of pay for your eligible employees as you do for yourself, which can get expensive. A solo 401(k) is only for owners with no employees (a spouse is the exception). Group practice owners usually look at a regular 401(k) or a SIMPLE IRA instead. Talk to a plan provider or a planner before you commit, because switching later is a hassle.

A retirement plan lowers the income you're taxed on this year, but it also means setting that money aside. If cash flow is tight, saving less is better than saving none, and a plan you can't afford to fund isn't helping you.

If your practice is an S corporation (a tax setup where you pay yourself a regular salary through payroll and take the rest of the profit separately), your retirement contributions and your salary are linked, so check with your CPA before the year closes. If you're weighing an S corp, our S-corp guide for mental health clinicians walks through when it makes sense.

Step 3: Put the January 15 estimated payment on your calendar

If you're self-employed, no employer is taking taxes out of your pay, so you send the IRS payments yourself four times a year. These are called quarterly estimated taxes. The last payment for 2026 is generally due January 15. Because you now know your profit so far, you can estimate what you'll owe and avoid a surprise.

If you've been making these payments all year, ask your CPA whether they're enough to avoid a penalty. There are simple rules for this, and it's a quick check. For a refresher on how quarterly payments work, see our guide to quarterly taxes for 1099 clinicians.

If you're an S corp: three extra steps

The steps above apply to everyone. If your practice has made the S-corp election, add these before the year ends:

• Is your own salary running through payroll? An S-corp owner who works in the practice generally needs to pay themselves a reasonable W-2 salary (a regular paycheck with taxes taken out), not just take distributions (pulling profit out of the business with no taxes withheld). If you've been taking only distributions, talk to your CPA now, not come tax season.
• Your retirement contribution depends on that salary. For an S-corp owner, the part of your retirement contribution that comes from your practice is based on your W-2 salary, so your salary and your retirement plan need to be planned together.
• Check your fourth-quarter payroll filings. Payroll is reported to the IRS every quarter, and W-2s (the yearly summary of what you paid yourself) are due in January. Confirm your payroll provider has what it needs.

If you have associates or contractors: three extra steps

Group practice owners have a longer list, and January is when it comes due.

• Collect a W-9 from every contractor you've paid this year. A W-9 is the one-page form where they give you their tax ID so you can report what you paid them. Get it before you need it, because chasing a former associate for a form in late January is no fun.
• Plan for 1099s. A 1099-NEC is the form that reports to the IRS what you paid a contractor. If you paid someone above a certain amount, you generally need to send one by January 31. That amount changed recently, so confirm this year's number with your CPA.
• Check how each person is classified. Whether an associate counts as a contractor (running their own business) or an employee (working for yours) depends on how the work actually happens, not on what the contract says. A rough test: who controls their schedule, their clients and how they do the work? If you're not sure, ask your CPA or an employment attorney before the year closes.

And while you're at it, look at what each associate actually adds to your profit after their split, supervision time and overhead. It's the same profit question from Step 1, applied one clinician at a time.

One thing not to do

Don't buy equipment or software just to create a deduction. Spending a dollar to save a fraction of a dollar in tax doesn't make you richer. If you were already planning to replace a laptop or upgrade your EHR, buying it before year-end may be reasonable. Otherwise, let the business needs decide.

Should you do this checklist right now?

• Yes, do it now: you own a practice or work as a 1099 contractor, you have real profit, and you're not sure whether you're on track.
• Not yet: you're newly licensed, still building a caseload, or have no profit to speak of. Focus on keeping your income and expenses organized first.
• Get help first: you have employees, an S corp, or a year with unusual income or expenses. Use the extra steps above, and bring in a CPA and a planner to save yourself a lot of guesswork.

The short version

1. Find your profit so far.
2. Decide on a retirement plan well before December 31.
3. Calendar the January 15 payment.

You help others with their toughest stuff. Let someone do the same for you. At Marrone Wealth Management, we work with therapists and other mental health clinicians on exactly this. We help you work out your real profit, choose and set up the right retirement plan for your practice, plan your tax payments alongside your CPA, and invest the money you're setting aside so it actually grows. If you'd like help figuring out where your practice stands, book a free 45-minute intro call. No pitch, no pressure. We'll talk about where you are and whether what I do is a fit.

Book a call → Click Here!

This post is general education, not individual tax, legal or investment advice. Rules and limits change, so confirm details with your tax professional.

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