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What Do Therapists Need to Know About Taxes in Maine?

If you're a licensed therapist in Maine running your own practice, this guide will walk you through what matters: business structures, state tax obligations, deductions, and when to consider leveling up your setup to save money on taxes.


Who this guide is for

This resource is for:

  • LCSWs, LCPCs, LMFTs, psychologists, and other licensed professionals in Maine
  • Solo practitioners or group practice owners
  • Clinicians offering in-person or telehealth services
  • Anyone who wants to run a clean, tax-smart practice without losing hours to admin

Step 1: Pick the right structure for your practice

Your business structure decides how you're taxed and how much protection you have legally.

Sole Proprietorship

  • No setup required — it's the default
  • Profits taxed as self-employment income
  • No liability protection
  • Ideal for testing the waters, but not long-term

LLC / PLLC

  • Maine allows licensed professionals to form PLLCs
  • Offers legal protection
  • Taxed as a sole prop by default
  • Can elect S Corporation status for tax advantages
  • Formation requires approval from the appropriate licensing board

S Corporation

  • Reduces self-employment tax by splitting income into salary + profit
  • Requires payroll and separate tax filings
  • Consider once net income is $75K+
  • You’ll file an 1120-S federally and a state corporate return in Maine

Professional Corporation (PC)

  • Permitted in Maine
  • May be more complex than necessary for solo practitioners
  • Can elect S Corp treatment, but PLLCs are more common for therapists

Step 2: Know your state tax obligations

State income tax

  • Maine has a progressive tax rate:
    • 5.8% on income up to $24,500
    • 6.75% on income between $24,501–$58,050
    • 7.15% on income above $58,050
  • These apply to pass-through income, including sole props, PLLCs, and S Corps

Franchise tax / business fees

  • No separate franchise tax for PLLCs or S Corps in Maine
  • Annual report fee: $85 due to the Secretary of State for most business entities

Local taxes and permits

  • Maine does not impose local income or gross receipts taxes
  • You may need a local business license depending on city or zoning ordinances
  • Check local rules if you’re seeing clients from a home office

Step 3: Pay taxes throughout the year (not just in April)

Estimated taxes

  • Due quarterly: April 15, June 15, September 15, January 15
  • Required if you expect to owe $1,000+ in federal or state income tax
  • Pay through Maine Revenue Services and the IRS
  • Missing payments = underpayment penalties

Self-employment tax

  • Applies to all sole props and default LLCs
  • Covers Social Security and Medicare (15.3% total)
  • If you elect S Corp, you’ll pay payroll taxes only on your W-2 salary

Filing requirements

  • Sole props file Schedule C with federal and Maine returns
  • PLLCs and PCs must file annual reports and possibly corporate returns
  • S Corps must file federal and Maine state S corp returns (Form 1120S and Form 1120ME)

Step 4: Track and claim your deductions

Deductions lower your taxable income — but only if you document them well.

Deductible expenses for therapists

  • Therapy software (EHR, telehealth platforms)
  • Office rent or home office (if exclusive and regular use)
  • CEUs, supervision, license renewals
  • Phone, internet, and office supplies
  • Business insurance (malpractice, liability)
  • Marketing: ads, listings, website hosting
  • Retirement plan contributions
  • Self-employed health insurance

Step 5: Know when it’s time to consider an S Corp

An S Corp isn’t for everyone, but it can save you thousands per year once your net income reaches a certain point.

  • Splits income into salary + profit
  • Lowers the amount subject to self-employment tax
  • Payroll, bookkeeping, and quarterly filings required
  • Typically makes sense if you’re netting $75K+

Step 6: Avoid common mistakes therapists make

  • Forgetting to pay quarterly estimated taxes
  • Mixing personal and business expenses
  • Not electing S Corp when income justifies it
  • Not tracking CEUs and supervision costs
  • Missing the $85 annual report filing
  • Forming an LLC instead of a PLLC (state requires PLLC for licensed professions)

Our recommendations by income level

Net Income Range

Suggested Action

Under $50K

Sole prop or PLLC, track everything, pay quarterlies

$50K–$100K

Evaluate S Corp election; outsource payroll; start planning ahead

Over $100K

Full S Corp setup, retirement savings, quarterly tax reviews with a CPA

Need help figuring this out?

We help therapists across Maine structure their practices, pay themselves properly, and avoid costly tax mistakes. We’ll help you set up clean books, smart payroll, and the right structure for your income level.

Book a consult or email us at david@leichtercpa.com


Disclaimer:

This guide is for informational purposes only and does not constitute legal, tax, or financial advice. While we make every effort to keep the content accurate and up to date, state laws and regulations can change without notice. You should consult a licensed professional in your state before making any decisions based on this information. Leichter Accounting Services is not liable for any errors or omissions, or for any actions taken based on the contents of this guide.