If you’re running a medical practice in Houston, you already know the basics: track your expenses, deduct your mileage, and keep good records. But let’s be honest- that’s the bare minimum. If you really want to lower your tax bill and keep more of what you earn, you’ve got to go beyond the usual advice.
Here are a few tax strategies for Houston medical practices that most doctors haven’t heard of – but absolutely should be using.
1. Maximize Your SEP IRA (Especially if You’re a High Earner)
If you’re self-employed or own your practice, a SEP IRA is one of the most powerful retirement tools available. Why? Because you can contribute up to 25% of your compensation or $69,000 in 2024 (whichever is less). That’s a huge tax deduction.
What makes it even better? It’s easy to set up, and you don’t have to contribute for employees if you’re a sole owner without staff. Even if you do have employees, you can design a plan that fits your practice’s structure.
Why it works: You’re not just saving for retirement – you’re lowering your taxable income now.
2. Use the Augusta Rule to Rent Your Home Tax-Free
Ever heard of the Augusta Rule? Most people haven’t.
Here’s how it works: You can rent out your home for up to 14 days per year, and the income is completely tax-free. So how does this help your practice?
If your medical practice is an S corp or C corp, it can rent your home for legitimate business purposes -like team strategy days, board meetings, or training sessions. You pay yourself fair market rent from the business, and deduct that expense as a business write-off. The best part? You don’t pay income tax on the rent you personally receive.
Pro tip: Document everything – agendas, attendance, and photos of the meeting setup.
3. Don’t Miss the QBI Deduction (Yes, Even as a Doctor)
The Qualified Business Income (QBI) deduction gives you up to 20% off your net income from certain types of businesses. And while it’s true that many doctors were excluded when this law came out, there are still ways to qualify- especially if your income is under certain thresholds.
If you’re structured as an S corporation or LLC, and your total taxable income is under about $191,950 (single) or $383,900 (married filing jointly) in 2024, you could qualify.
What to ask your CPA: “Can we run a QBI projection based on my practice’s net income?”
4. Turn Family Travel Into Business Deductions
Let’s say you’re heading to Austin for a medical conference. Why not bring your spouse or kids along and turn part of the trip into a business deduction?
If you’re attending a qualified event, the flights, hotel, meals, and mileage can be deducted – as long as they’re tied to business. For family members, their costs are only deductible if they’re employees or working the event in some way (think: helping with setup, logistics, etc.).
How to make it work: Keep it legit. Book the conference first. Add the family later. And keep notes on what’s business vs. personal.
5. Hire Your Kids (Yes, Really)
If your children help out at your office – filing papers, scanning forms, answering phones – you can pay them a reasonable wage and deduct it as a business expense.
For 2024, you can pay them up to $14,600 (the standard deduction) without them owing any federal income tax.
Why this works: It shifts income from your higher tax bracket to their lower (or zero) tax bracket—saving your family thousands.
6. Lease Your Vehicle Through the Business
If you use your car for patient visits, errands, or picking up supplies, leasing it through the practice might make more sense than mileage reimbursement.
You could deduct the lease payments, gas, insurance, and maintenance – as long as the vehicle is used primarily for business.
Just make sure to keep a mileage log and back up business use with receipts and calendar entries.
7. Consider a Cost Segregation Study for Owned Office Space
If you own your building (or even if you’ve made major improvements), a cost segregation study can help you accelerate depreciation and get a much bigger deduction now rather than spreading it out over 39 years.
It’s especially valuable if your practice is doing well and you need bigger deductions now to offset income.
Pro tip: These studies aren’t cheap, but the tax savings often outweigh the cost by a lot.
One Last Thought: Get Local with Your Tax Planning
Houston has its own quirks – property taxes, franchise taxes, and local rules that out-of-state CPAs might overlook. Make sure your tax advisor knows Texas and knows medical.
Want Help Using These Strategies?
At Virjee CPA, we work with medical practices in Houston all the time- and we love helping doctors use tax strategies that actually make a difference.
If you’re tired of the same old tax advice, reach out. We’ll help you put these (and more) into action -so you can spend less on taxes and more on what matters.
