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What Do Therapists Need to Know About Taxes in Wisconsin?

Wisconsin therapists face state income tax, annual business filings, and decisions about when to switch entity types. If you’re running or planning to launch a private practice, this 2025 guide breaks down how to stay compliant and reduce your tax burden.


Who this guide is for

This guide is for:

  • Licensed Wisconsin therapists (LPCs, LCSWs, LMFTs, psychologists, etc.)
  • Solo or group private practice owners
  • Clinicians providing telehealth or in-person therapy
  • Therapists earning 1099 or self-employment income

Step 1: Pick the right structure for your practice

Your business structure affects everything from liability protection to how you're taxed.

Sole Proprietorship

  • No formal registration unless using a trade name
  • No legal separation between you and your business
  • Report income directly on your personal return
  • Must file a DBA with the Wisconsin Department of Financial Institutions (DFI) if using a business name

PLLC (Professional LLC)

  • Wisconsin allows licensed professionals to form PLLCs
  • Offers liability protection
  • Default taxation is pass-through (like sole prop)
  • Can elect S Corp status with the IRS
  • File Articles of Organization with the DFI

S Corporation

  • Reduces federal and state self-employment taxes
  • Requires compliant payroll, bookkeeping, and extra filings
  • Usually worthwhile at ~$75K+ net income
  • Wisconsin recognizes S Corps and requires separate filings

Professional Corporation (SC in WI)

  • Permitted for licensed professionals
  • Can elect S Corp taxation
  • Admin-heavy, best for group or multi-owner setups

Step 2: Know your state tax obligations

State income tax

  • Wisconsin has progressive income tax rates, topping out at 7.65% (2025)
  • Pass-through income from PLLCs or S Corps is taxed at the individual level
  • File using Form 1 (resident return)

Entity tax

  • S Corps are subject to corporate income/franchise tax
  • Even if no income is earned, filing is required
  • Minimum franchise tax may apply depending on activity

Annual reports

    • Required for PLLCs and PCs
  • Due by the end of the quarter in which the entity was formed
  • $25 filing fee
  • File online through Wisconsin’s One Stop Business Portal

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

Estimated taxes

  • Required if you expect to owe $500+ to WI or $1,000+ to the IRS
  • Due quarterly: April 15, June 15, Sept 15, Jan 15
  • Use Form 1-ES or pay via My Tax Account (MTA)

Self-employment tax

  • 15.3% on net income for sole props or default PLLCs
  • Can be reduced with S Corp election and salary structure

Filing requirements

  • Sole prop: Schedule C + WI Form 1
  • PLLC: Form 1 + annual report + estimated payments
  • S Corp: Federal 1120-S + WI Form 5S + payroll + annual report

Step 4: Track and claim your deductions

Proper expense tracking is one of the easiest ways to cut your tax bill.

Deductible expenses for therapists

  • Rent or home office
  • Practice software (EHR, scheduling, billing)
  • CEUs, licensing, and supervision
  • Marketing, directories
  • Liability and malpractice insurance
  • Health insurance (if self-employed)
  • Phone, internet, office supplies
  • Retirement contributions (Solo 401k, SEP IRA)

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

At around $75K net income, it’s worth considering an S Corp to reduce your tax load.

  • Pay yourself a reasonable W-2 salary
  • Take additional income as distributions (not subject to SE tax)
  • Requires regular payroll and separate filings
  • You’ll need to file WI Form 5S annually

Step 6: Common mistakes therapists make

  • Skipping the annual report filing
  • Waiting too long to switch to S Corp
  • Not registering a trade name when required
  • Missing estimated tax deadlines
  • Combining business and personal expenses
  • Not documenting CEUs or office deductions

Step 7: Our recommendations by income level

Net Income Range

Suggested Action

Under $50K

Stay sole prop or PLLC; file correctly; track all expenses

$50K–$100K

Consider S Corp; begin payroll; use a professional for WI Form 5S

Over $100K

Full S Corp setup; maximize benefits and deductions; professional planning recommended

Need help figuring this out?

We help Wisconsin therapists navigate business filings, tax structure, and entity setup so they don’t leave money on the table or risk compliance issues.

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.