Therapists & Counselors, CPA & Tax Services

Why Therapists and Counselors in Dallas Need a CPA Who Understands Their Practice

Most therapists and counselors in the Dallas-Fort Worth area operate as solo practitioners or small group practices, and the tax situation that comes with that model is more complex than it looks. Between choosing the right entity structure for your PLLC, deducting your home office for teletherapy sessions, tracking sliding-scale fee income correctly, and claiming continuing education costs, there are real dollars at stake that a general-purpose tax preparer will miss.

At AG Freideman, we work with licensed therapists, licensed professional counselors (LPCs), licensed clinical social workers (LCSWs), and psychologists across Dallas, Plano, Frisco, Richardson, and the surrounding suburbs. Al Freideman, CPA, handles every client personally, with over 30 years of experience helping professionals like you keep more of what you earn while staying fully compliant with the IRS and the Texas Comptroller.

Solo PLLC vs. S-Corp: Which Structure Saves Therapists the Most?

If your therapy practice nets more than roughly $50,000 to $60,000 per year in profit, you may be overpaying self-employment tax by operating as a single-member PLLC taxed as a sole proprietorship. The self-employment tax rate is 15.3% on your first $168,600 of net earnings in 2026 (the Social Security wage base set by the IRS). For a therapist netting $100,000, that is over $15,000 in self-employment tax alone, on top of your income tax.

An S-Corp election (filed on IRS Form 2553) lets you split that income into two buckets: a reasonable salary that you pay employment taxes on, and distributions that are not subject to the 15.3% self-employment tax. For a solo therapist netting $100,000, paying yourself a $55,000 salary and taking $45,000 as a distribution could save roughly $6,800 in self-employment tax per year.

But the S-Corp is not free. You will need to run payroll (including quarterly 941 filings), file a separate 1120S business return, and maintain clean books. We walk every therapist through a breakeven analysis during a tax planning session to determine whether the tax savings outweigh the added compliance cost. For practices netting under $50,000, staying as a PLLC taxed as a sole proprietor usually makes more sense. For those above $60,000 to $70,000, the S-Corp often pays for itself many times over.

Home Office Deductions for Teletherapy Practitioners

If you provide teletherapy sessions from a dedicated space in your home, you likely qualify for the home office deduction under IRS rules, and it can be substantial. The key requirement is that the space must be used regularly and exclusively for your practice. A spare bedroom converted into your virtual therapy office qualifies. Your kitchen table does not.

You have two methods available. The simplified method allows $5 per square foot, up to 300 square feet, for a maximum deduction of $1,500. The regular method lets you deduct the actual percentage of your home expenses (mortgage interest or rent, utilities, insurance, repairs, internet) based on the square footage your office occupies relative to your total home. For many Dallas-area therapists with higher housing costs, the regular method produces a significantly larger deduction.

We also see therapists miss the internet deduction. If you use your home internet for teletherapy sessions, the business-use percentage is deductible. We help you calculate and document this properly so it holds up if the IRS ever asks questions.

Tracking Sliding-Scale and Reduced-Fee Income Correctly

Many counselors in the Dallas-Fort Worth area offer sliding-scale fees to make therapy accessible. While that is admirable, it creates a bookkeeping challenge that trips up a lot of practitioners. The IRS expects you to report the income you actually received, not your full-rate fee. You do not report the “discount” as a separate deduction, and you should never report full fees and then deduct the difference as charity.

Where therapists get into trouble is inconsistent recordkeeping. If you charge $150 per session at full rate but see ten clients per week at $80 on a sliding scale, your books need to clearly show what was collected for each session. We set up bookkeeping systems that categorize income by fee type so your records are clean, accurate, and audit-ready. This also helps you understand your true effective rate per session, which is critical for making smart business decisions about your practice.

Continuing Education and Licensure Deductions Most Therapists Overlook

Texas requires licensed professional counselors to complete 24 hours of continuing education every two years, and psychologists need 22 to 24 hours per year depending on their license type. These costs are deductible as ordinary and necessary business expenses, but many therapists only deduct the course registration fee and forget about the rest.

• CE course fees and workshop registrations: fully deductible, including online courses and webinars
• Travel to CE events: mileage (IRS standard rate for 2026), airfare, hotel, and 50% of meals when traveling overnight
• Professional licensure renewal fees: your LPC, LCSW, or psychologist license renewal paid to the Texas Behavioral Health Executive Council
• Professional memberships: ACA, APA, NASW, Texas Counseling Association, and local Dallas chapter dues
• Clinical supervision fees: if you are an LPC Associate paying for required supervision, those fees are deductible as a business expense
• Professional liability insurance: your malpractice coverage premium is fully deductible
• Books, journals, and subscriptions: including diagnostic manuals (DSM-5-TR), therapy workbooks, and clinical journal subscriptions

These deductions add up quickly. A therapist spending $2,500 per year on CE, memberships, and licensure costs saves $550 to $900 in taxes depending on their bracket, and that is money many practitioners leave on the table simply because they did not track these expenses.

Common Tax Mistakes We Fix for Therapists and Counselors

After 30 years of working with professionals across the Dallas-Fort Worth area, we see the same costly mistakes from therapy practices again and again. Here are the ones we fix most often:

• Staying in a sole-proprietor PLLC too long: therapists netting $70,000 or more who have never evaluated the S-Corp election are often overpaying $4,000 to $8,000 per year in unnecessary self-employment tax.
• Not making quarterly estimated tax payments: the IRS charges underpayment penalties if you owe more than $1,000 at filing time. Estimated payments are due April 15, June 15, September 15, and January 15. Many solo therapists miss these deadlines and get hit with penalties every year.
• Mixing personal and business bank accounts: this makes expense tracking unreliable, inflates your tax preparation costs, and weakens your position if the IRS audits you. We help clients set up a clean bookkeeping system from day one.
• Forgetting the Texas Franchise Tax: every Texas LLC and PLLC must file an annual franchise tax report with the Comptroller, even if you owe $0 because your revenue falls below the $2.47 million no-tax-due threshold. Failure to file can result in your entity being involuntarily terminated by the state.
• Misclassifying 1099 contractors: if your group practice pays associate therapists as independent contractors, the classification must meet IRS guidelines. Getting this wrong triggers back taxes, penalties, and interest that can be devastating for a small practice.

What Our Therapist and Counselor Clients Receive