Is Your Practice Ready for the 2025 Tax Season? Essential Financial Tips for Behavioral Health Providers

Tax season can be stressful for behavioral health practice owners, but with the right strategies, you can reduce headaches and maximize savings. As 2025 tax deadlines approach, now is the time to get your finances in order to ensure compliance and take advantage of potential deductions. In this guide, we’ll walk you through essential financial tips to help your practice prepare for tax season.

1. Mark Your Calendar with Key Tax Deadlines

Missing a tax deadline can result in penalties and unnecessary stress. Make sure you’re aware of these important dates:

• January 31, 2025 – Deadline to issue 1099s and W-2s to contractors and employees.

• March 15, 2025 – Tax filing deadline for S-Corporations and Partnerships.

• April 15, 2025 – Tax filing deadline for sole proprietors, single-member LLCs, and C-Corporations.

• October 15, 2025 – Extended tax filing deadline (if you filed for an extension).

2. Take Advantage of Tax Deductions

Behavioral health providers have access to several business deductions that can lower taxable income, including:

• Office Rent & Utilities – If you lease office space, these expenses are deductible.

• Practice Management Software & EHR Costs – Any software used for billing, scheduling, or documentation can be written off.

• Professional Development – Licensing fees, CEU courses, and industry conferences.

• Malpractice & Business Insurance – Essential protections that qualify as deductions.

• Marketing & Advertising – Website hosting, digital ads, and branding expenses.

• Home Office Deduction – If you work from home, a portion of rent, internet, and utilities may be deductible.

3. Organize Your Financial Records Now

Good bookkeeping throughout the year makes tax season much easier. If you haven’t already, consider:

• Keeping all receipts and invoices organized in a cloud-based system.

• Separating business and personal expenses with a dedicated business bank account.

• Using accounting software or hiring a professional to track income and expenses.

• Reconciling financial statements monthly to catch any discrepancies early.

4. Understand 1099 vs. W-2 Employee Tax Implications

If your practice employs both W-2 employees and 1099 contractors, make sure you understand tax obligations:

• W-2 Employees – Employers must withhold taxes, provide benefits, and pay payroll taxes.

• 1099 Contractors – No taxes are withheld, but you must issue a 1099 form if payments exceed $600 in a year.

• Misclassifying employees can result in fines, so consult a tax professional if unsure.

5. Consider Working with a Tax Professional

Navigating tax laws and maximizing deductions can be complex. Working with an accountant or tax professional who understands the behavioral health industry can save you time and money. They can help with:

• Ensuring compliance with federal and state tax laws.

• Identifying overlooked deductions.

• Preparing for audits and avoiding red flags with the IRS.

• Strategic tax planning for long-term financial health.

6. Pay any Provider Taxes Required by your State

A provider tax is a small tax that applies to anyone providing healthcare services in a state. Minnesota’s provider tax is 1.8%. 

• Often there are exemptions for specific state and federal programs, but not many. 

• These are often due quarterly if your tax is greater than a certain amount ($500 for MN Providers)

• Consult with your tax professional for details about your state’s requirements.

Tax season doesn’t have to be overwhelming. By preparing now, tracking your expenses, and working with the right professionals, you can reduce stress and keep more of your hard-earned revenue.

Need help streamlining your billing and financial processes? BreezyBilling offers solutions to help behavioral health providers stay organized and maximize revenue. Learn more today.