Healthcare tax planning
Greywood CPA plans and prepares taxes for medical and dental practice owners, home care agency owners and health nonprofits. Every return is prepared and reviewed by a senior CPA, and planning happens before year-end, when it can still change what you owe. We work nationwide, at a fixed fee.
For practice owners the biggest levers are usually entity structure and owner pay, state pass-through entity tax elections and retirement plans. Health practices are "specified service" businesses, so the qualified business income deduction phases out at higher incomes. For health nonprofits, the focus is an accurate Form 990 and keeping unrelated business income under control.
Last reviewed: November 2026
Many practices operate as S corporations so owners take part of their income as distributions rather than wages subject to payroll tax. The IRS requires S corporation owner-employees to pay themselves reasonable compensation for the work they do, and physicians are a common audit target when salaries look too low.
Many states let partnerships and S corporations pay state income tax at the entity level. The entity deducts it federally, which works around the federal cap on deducting state and local taxes for individuals. Each state has its own deadlines and election rules, so the decision has to be made during the year, not at filing time.
The qualified business income deduction lets owners of pass-through businesses deduct a portion of their business income. Health is a "specified service trade or business," so once an owner's taxable income passes the annual threshold, the deduction phases down and eventually disappears. Planning around those thresholds, through retirement contributions and timing, can preserve some of it.
Retirement plans are often the largest deduction available to high-earning practice owners.
We work alongside your plan administrator on the tax side and the year-end accruals.
Practices with locations, providers or telehealth patients in more than one state can owe income tax and file returns in each. We map where you have filing obligations, handle composite and nonresident filings for owners, and keep apportionment consistent year to year.
Health nonprofits file Form 990 every year, with the schedules that apply to them. Hospital organizations also file Schedule H on community benefit. We prepare the return from your audited statements so the numbers match.
Income from activities outside your exempt purpose, such as some rentals, retail or services sold to non-patients, can be unrelated business income that is taxable and reported on Form 990-T. We review your revenue streams and flag what may be taxable before it becomes a problem.
See tax preparation.
Tax planning works best on a calendar, not at filing time:
The IRS requires S corporation owner-employees to pay themselves wages that reflect what the business would pay someone else to do the same work. For physicians that is usually based on market compensation data for the specialty and the hours worked. Setting it too low is a common audit issue.
Health is a specified service trade or business, so the qualified business income deduction is available in full only below an annual taxable income threshold. Above it, the deduction phases down and then disappears. Planning around the threshold can preserve some of it.
Many states let partnerships and S corporations pay state income tax at the entity level, where it is deductible federally. This works around the federal limit on deducting state and local taxes for individuals. Rules and deadlines differ by state.
It can. Income from regularly carried-on activities unrelated to your exempt purpose may be unrelated business income, which is taxable and reported on Form 990-T.
We quote one fixed fee in writing before any work starts, based on the returns you need, the number of entities and owners, and the planning involved.
Tell us about your practice or organization. A senior CPA will review your situation and send a fixed-fee proposal within 1–3 business days.