Tax Tips for Doulas: What kinds of expenses can I deduct?

Part 1. What kinds of expenses can I deduct?

expensesThink in terms of capturing and recording every penny you spend on your business. Anything reasonably related can and should be deducted. Why “should”? Because you will need to pay 15.3% FICA tax on the net income from your business. “Net” equals gross (total amount you earned) minus allowable deductions. This calculation happens before your net business income gets plugged into the overall personal or family income picture on your Form 1040; then your federal and state taxes will figure in. So, for example, if you netted $10,000 in your business last year, you are liable for $1530 in FICA taxes plus the federal and state taxes! Therefore, it is to your advantage to take all allowable deductions against your gross business income in order to reduce the net amount on which the FICA calculation will be made. Following is a list of applicable deductions for doulas.

  • Continuing Education—tuition or fees to attend professional conferences, workshops, webinars; expenses related to attending the educational event are deductible, including lodging, travel (airfare, train fare, bus fare, shuttles, taxis, mileage), and 50% of meals purchased; subscriptions to professional journals
  • Equipment & Furnishings—computer, printer, office furnishings (desk, file cabinet, bookcase, etc.); must be for sole use in your business in order to write off the full cost; if the entire family is using the new computer, then a percentage should be applied to represent business use; you can also depreciate these types of investments but that gets a bit more complicated so you may want to consult an accountant
  • Home office—a percentage of your rent or interest on your mortgage, as well as utilities and repairs, can be deducted but strict rules apply; large deductions for home offices are notorious for getting the attention of the IRS and could flag you for an audit (to be addressed in Part 2 of this series)
  • Insurance—professional liability insurance, commercial insurance, automobile rider (for transport of clients in your vehicle)
  • Internet access—service provider monthly fees (again, only deduct percentage used for business purposes)
  • Marketing—advertising; brochures; business cards; booth fees for community events; email service providers (e.g., Mail Chimp or Constant Contact); website design services, hosting and domain fees; professional head shot; etc.
  • Mileage—The deduction amount for business-related travel is set by the IRS. It is typically an annual rate, though occasional mid-year adjustments can be made due to large fluctuations in the price of gas. You cannot claim mileage to commute to a job or your office, if you have one outside the home. For 2014, the per mile rate is $.555. This can really add up for doulas making home visits or those who travel up to an hour radius (or more) from home to attend births!
  • Miscellaneous—gifts, cards, copying costs, parking/tolls, bank fees, etc.
  • Phone—home, cell phone (you can only claim the percentage used for business)
  • Professional fees—membership dues, certification fees, business licenses, business-name registration fee, incorporation fees, accountant fees, lawyer fees, backup doula fees
  • Rent & Utilities—for office space outside your home
  • Supplies—office supplies (printer cartridges, paper, postage, envelopes, file folders, accounting software, ledger, day planner, etc.) and doula supplies (birth ball, carrying bag, massage oil, rebozo, educational materials, etc.)

What is not deductible against business income?

  • Child Care (see Form 1040 instructions for this deduction)
  • Cost of initial training to start a new career; to be claimed as a deduction, education must meet the test of maintaining or improving a skill required in your business; training is not deductible if it is required to meet the minimum educational requirements of your present business or if the education will qualify you for a new trade or business, such as your basic doula training; however, an expansion of services offered qualifies (Examples: a massage therapist with an existing business requiring Schedule C reporting to the IRS decides to take birth doula training; in her second year of business, a birth doula decides to take postpartum doula training)
  • 50% of food/meals when doing business-related travel (think in terms of eating dinner in the hospital cafeteria, business meetings over lunch or meals purchased when traveling for continuing education such as workshops or conferences)

Watch for three more weekly installments on Tax Tips for Doulas, just in time for tax season. This series has been updated from 2015 but I thought I would run it again for all the newer doulas out there who may not have seen the series last year.

Patty Brennan is the author of The Doula Business Guide and The Doula Business Guide Workbook (NEW!). Now offering Advanced Business Training for Birth Professionals — a highly-interactive and inspiring workshop designed to help you take your business to the next level. Also offering our Small Business Basics Online Classroom with eight classes covering the nitty gritty of establishing a small business and growing it into a sustainable income.

Posted by Patty Brennan on March 18, 2015 • Filed under
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