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What Do Therapists Need to Know About Taxes in Nebraska?

Nebraska’s mix of income tax brackets, local business requirements, and entity rules means private practice therapists need to be proactive with tax planning. Whether you're just getting started or managing a growing caseload, this guide breaks it all down.


Who this guide is for

This guide is for:

  • Licensed Nebraska therapists (LMHPs, LIMHPs, LICSWs, LMFTs, psychologists, etc.)
  • Solo and group practice owners
  • Therapists operating in-person, via telehealth, or both
  • Clinicians looking for tax clarity and compliance confidence

Step 1: Pick the right structure for your practice

Your legal setup impacts your taxes, liability, and filing requirements.

Sole Proprietorship

  • Automatically applies if you don’t register a formal entity
  • All income reported on your personal return
  • No liability protection
  • Must register a trade name if using a business name

PLLC (Professional LLC)

  • Nebraska allows licensed professionals to form PLLCs
  • Provides personal liability protection
  • Default pass-through taxation
  • Can elect S Corp tax status with the IRS
  • File with the Nebraska Secretary of State

S Corporation

  • Splits income into salary and distributions to reduce self-employment tax
  • Requires payroll and extra filings
  • Becomes cost-effective at ~$75K+ net income
  • Still subject to Nebraska state income tax

Professional Corporation (PC)

  • Also allowed for licensed professionals in Nebraska
  • More formal admin requirements
  • Can elect S Corp status
  • Used more commonly for group practices

Step 2: Know your state tax obligations

State income tax

  • Nebraska uses graduated brackets, topping out at 6.64% (2025)
  • Applies to all pass-through business income
  • File with Form 1040N

Annual reports

    • Required for PLLCs and PCs
  • Due April 1 every odd-numbered year
  • File through the Nebraska Secretary of State
  • $10–$30 fee depending on entity type

Local business licenses

  • Some cities, like Omaha and Lincoln, may require local registration or occupation tax
  • Check with your city clerk or local tax authority

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

Estimated taxes

  • Required if you expect to owe $500+ to Nebraska or $1,000+ to the IRS
  • Due quarterly: April 15, June 15, Sept 15, Jan 15
  • Use Nebraska Form 1040N-ES or pay online via the Nebraska Department of Revenue

Self-employment tax

  • 15.3% applies to all net income from sole props or default PLLCs
  • Can be reduced by electing S Corp and running compliant payroll

Filing requirements

  • Sole prop: Schedule C + NE Form 1040N
  • PLLC: Biennial report + NE Form 1040N + federal return
  • S Corp: Federal 1120-S + NE Form 1120-SN + payroll + biennial report

Step 4: Track and claim your deductions

Every deduction you track lowers your taxable income — make it count.

Deductible expenses for therapists

  • Rent, coworking space, or home office
  • Practice software: EHR, scheduling, billing
  • Continuing education, supervision, license renewals
  • Malpractice insurance
  • Office expenses: phone, internet, supplies
  • Marketing, online directories, branding
  • Health insurance (self-employed)
  • Retirement contributions (Solo 401k, SEP IRA)

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

When your practice nets around $75K or more, switching to an S Corp may save you thousands.

  • Pay yourself a reasonable salary
  • Take remaining income as distributions
  • Avoid SE tax on the distribution portion
  • Must handle payroll and file a Nebraska S Corp return

Step 6: Common mistakes therapists make

  • Missing the biennial report filing deadline (April 1 on odd years)
  • Forgetting to register a trade name (DBA)
  • Ignoring city-specific taxes or license requirements
  • Not making quarterly payments to the state
  • Choosing the wrong business structure based on income
  • Skipping deductible expenses like supervision or software

Step 7: Our recommendations by income level

Net Income Range

Suggested Action

Under $50K

Sole prop or PLLC; file Form 1040N; track expenses carefully

$50K–$100K

Consider S Corp election; set up payroll and accounting systems

Over $100K

Full S Corp structure; optimize deductions and year-end strategy

Need help figuring this out?

We work with Nebraska therapists to simplify entity setup, reduce taxes, and stay compliant with both state and local rules.

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.