Every January, a version of the same question shows up in my inbox. A therapist writes in and says, “I see almost all my clients over video from my home office now. Can I deduct anything for that?”
The short answer is usually yes. The longer answer is that most self-employed therapists either overclaim without realizing it, or they leave real tax deductions on the table because they think the rules for a private practice are stricter than they actually are.
Telehealth adoption took off during COVID-19 and never really slowed back down for a lot of practices. If it makes up part or all of your caseload, this is worth a few minutes of your time before you file.
Does Your Home Office Actually Qualify?
The IRS asks two simple questions. Neither one is about how nice the room looks.
First: is the space used only for your practice?
A guest room that occasionally hosts visitors doesn’t count, even if you take client calls there the rest of the year. A spare bedroom or basement that’s now permanently your office does count.
Second: is it where you regularly do your work?
That could mean seeing clients, or it could mean handling notes, billing, and scheduling. If telehealth is your main way of seeing clients, this part is easy. If you split time between a rented office and home sessions, your home office can still qualify as long as it’s where the administrative side of your practice happens.
One thing to know up front: this deduction is only for the self-employed. If you’re a W-2 employee at a group practice, even one that has you working from home full time, you can’t claim it on your federal return right now. It’s available to independent contractors, sole proprietors, and therapists running their own private therapy practice as an S corporation or other pass-through entity that files on Schedule C.
Entity structure matters here too. If you set up a single-member LLC and never made any further election, the IRS taxes it by default the same as a sole proprietorship.
If you elected S corporation status instead, your business files its own return, and the home office arrangement usually works through an accountable plan that reimburses you rather than a direct Schedule C deduction. Your tax professional can tell you which situation applies to you.
Two Ways to Calculate It
Once you know you qualify, you pick one of two methods.
The simplified method is straightforward. Measure your office, up to 300 square feet, and multiply by the IRS rate of $5 per square foot. That gives you a deduction of up to $1,500. No receipts to dig through, no depreciation math.
The regular method (sometimes called the standard method) takes more work but can pay off, especially if your office is large or your housing costs are high.
You figure out what percentage of your home your office takes up, then apply that percentage to your actual home expenses. That includes
- Mortgage interest
- Real estate taxes
- Utilities
- Insurance
- Repairs
- Depreciation on the home itself
This method uses Form 8829, along with Form 4562 for depreciation, and the total flows to your Schedule C. If you itemize on Schedule A, the personal portion of your mortgage interest and property taxes, the part not allocated to your office, still belongs there.
Here’s a quick way to picture the difference. Say your office is 200 square feet in a 2,000 square foot home, which is 10 percent of the home. Under the simplified method, that’s 200 times $5, or $1,000.
Under the regular method, you’d add up your actual home costs for the year, things like mortgage interest, utilities, and insurance, and take 10 percent of that total instead. If your yearly home costs run $15,000, the regular method could land closer to $1,500, and sometimes more once depreciation is added in. The simplified method wins on ease. The regular method sometimes wins on dollars.
You don’t have to pick one method forever, either. Many therapists use the simplified method one year and switch the next, depending on which one comes out ahead. If you rent instead of own, the same idea applies. You just use rent in place of mortgage interest and depreciation, and renter’s insurance in place of a homeowners policy.
Everyday Expenses You Can Also Deduct
The home office number is just one piece. A therapy practice run out of a home office usually comes with a longer list of deductible expenses sitting around it, including:
- The business portion of your internet bill
- EHR software, HIPAA-compliant telehealth platforms, and practice management tools
- Bookkeeping software and the bank fees that come with a business account
- Malpractice and professional liability insurance premiums
- Licensing renewals and dues to a professional organization
- Legal and professional fees for contract review or business setup
- Continuing education, CEU courses, and other CE requirements
- Business travel and conference expenses
- Website hosting, Google Ads, and social spend on Facebook or Instagram
- Contract labor, like a virtual assistant, bookkeeper, or clinician you bring on for supervision
- Art therapy supplies and other therapeutic aids used in sessions
- Fees tied to processing insurance claims
Small purchases have their own rule, and it’s a generous one.
If you buy a laptop, a desk, or a printer for $2,500 or less, you can deduct the full cost the year you buy it instead of spreading it out over several years. This is called the de minimis safe harbor election.
For a larger purchase that goes over that threshold, a new computer system or office furniture package, the Section 179 deduction often lets you write off the full cost in the year you place it in service rather than depreciating it over time. Either way, hang on to the receipts.
What If You See Clients in More Than One State?
Telehealth has created a new kind of question for therapists. What happens when your home office sits in one state, but you’re licensed and seeing clients in a few others?
Your home office deduction follows your home, not your clients. That part doesn’t change. But holding licenses in multiple states, or seeing clients who live outside your home state, can create separate state income tax filing requirements. Every state has its own rules for what counts as enough presence to tax you, and those rules don’t always line up. If this sounds like your practice, it’s a good topic for a direct conversation with your accountant rather than a guess.
Deductions People Often Miss
A few tax write-offs get missed even by therapists who are otherwise careful with their record-keeping.
Mileage is one. Driving to a conference, a supervision session, or a networking event counts as vehicle and travel expenses, deductible whether you track it with the standard mileage rate or your actual costs. A mileage-tracking app on your phone is far easier than trying to remember a year of trips in April.
The Qualified Business Income deduction is another. Under Section 199A, many self-employed therapists can deduct up to 20 percent of their qualified business income on top of everything else, and that deduction is now a permanent part of the tax code.
The catch is that therapy is treated as a specified service trade or business, so the full 20 percent phases out once your income passes certain limits. Whether you get the full benefit depends on your specific numbers, so check instead of assuming.
The QBI deduction and your other write-offs lower your taxable income for federal income tax purposes, but they don’t reduce self-employment tax, the Social Security and Medicare tax you pay on your net earnings.
If you’re self-employed and expect to owe more than a small amount, you’re generally required to send in quarterly estimated payments using Form 1040-ES rather than waiting until April.
Retirement contributions matter too. Putting money into a SEP IRA, a SIMPLE plan, or a Solo 401(k) lowers your taxable income now while you build savings for later. It’s easy to skip when your caseload is full, but the opportunity is there every year.
A Few Recent Changes to Know
Tax law shifted for the 2025 tax year, and a couple of changes are worth knowing about, even though most of them don’t touch the home office deduction directly.
You may have seen headlines about a new $6,000 deduction. That one applies to taxpayers age 65 and older. It’s unrelated to home offices and phases out at higher incomes. Ask your accountant if it applies to you, but it has nothing to do with your office square footage.
The home office rate itself hasn’t changed. It’s still $5 per square foot under the simplified method, still capped at $1,500. If you come across older articles that say otherwise, check with a tax professional or the IRS directly before you file.
Keep a Few Simple Records
The home office deduction has an old reputation for triggering audits. That reputation isn’t really deserved anymore, but I recommend keeping specific records:
- Photos of your office taken periodically, showing exclusive business use
- The square footage of both your office and your home
- Receipts for anything claimed under the regular method
- A mileage log for business travel
- A copy of your safe harbor election, if you used one
That’s really all it takes to back up what you claim. Consistent bookkeeping throughout the year makes this part almost effortless.
The Bottom Line
If you see clients from home, even part time, there’s a good chance you qualify for the home office deduction. Pick whichever calculation method actually saves you more, keep a light paper trail as you go instead of scrambling in December, and don’t stop at the home office number.
Between your software, insurance, continuing education, and mileage, the smaller deductions around it often add up to more than the home office write-off itself. If you’re not sure your setup qualifies, or which method fits your practice, that’s exactly the kind of question to bring to your tax professional before the year ends.
Every practice looks a little different once you get into the details, licensing across states, entity structure, how much of the year was telehealth versus in-person. More on how we work with therapists and mental health practices is here.