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What tax deductions are available for home health agencies?

Labor costs typically make up the majority of a home health agency’s expenses and are fully deductible. This includes wages for nurses, aides, and administrative staff. It also covers employer payroll taxes, health insurance contributions, retirement plan matching, and workers’ compensation premiums. If you’re paying it because you have employees, you can deduct it.

Vehicle and mileage expenses matter more for healthcare providers doing home visits than for most other industries. Caregivers driving to patient homes rack up significant miles. You can deduct actual vehicle expenses like gas, maintenance, and insurance, or you can use the standard mileage rate. If you reimburse employees for their mileage, those reimbursements are deductible to the business and tax-free to the employee when documented correctly. Keep mileage logs with dates, addresses, and business purpose for each trip.

Medical supplies and equipment are deductible. Gloves, wound care supplies, blood pressure cuffs, mobility aids, and any other items provided to caregivers or used in patient care. Larger equipment purchases may need to be depreciated over time or deducted immediately under Section 179, depending on the cost and your tax situation.

Insurance premiums add up in home health. General liability, professional liability, workers’ comp, and cyber liability coverage are all deductible. The premiums tend to run higher than in other industries because of the nature of the work and the environments your staff enters.

Training and continuing education costs count as deductions. Required certifications for nurses and aides, compliance training, CPR renewals, and professional development courses all qualify. If you pay for an employee to complete a certification program or attend a conference, those costs are deductible too.

Technology expenses include electronic health records systems, scheduling software, billing platforms, telehealth tools, and mobile devices issued to field staff. Both the upfront hardware costs and ongoing software subscriptions are deductible.

Office and administrative costs like rent, utilities, office supplies, and internet service are standard deductions. If you run the business from a home office, a portion of your home expenses may be deductible based on the space used exclusively for business.

Commonly missed deductions include background check fees for new hires, uniform costs and scrubs, cell phone reimbursements for field staff, medical waste disposal services, and dues to professional associations. These smaller expenses add up over twelve months.

The deductions only work if you can prove them. A bookkeeper near Bentonville who keeps your expenses categorized correctly throughout the year means nothing gets missed at tax time. When every charge is coded properly as it happens, your tax preparer sees the full picture and you claim every deduction you’ve earned.

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More Questions

What's the difference between a bookkeeper and an accountant?

Bookkeepers handle the daily recording and organizing of your financial transactions. Accountants analyze that data to prepare tax returns and provide strategic advice. Most small businesses need both working together.

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What records should landscaping companies keep?

Landscaping companies should keep financial records, job documentation, equipment logs, employee files, and customer contracts. Organized records protect you in disputes, simplify tax preparation, and show which types of work are actually profitable.

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Can QuickBooks generate reports for my accountant at tax time?

Yes, QuickBooks can generate all the reports your accountant needs for tax preparation. The key reports include Profit and Loss, Balance Sheet, and General Ledger, which you can export or share directly through Accountant Access.

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What financial reports should restaurant owners review weekly?

Restaurant owners should review sales summaries, food cost percentage, labor cost percentage, and cash position reports weekly. These reports help catch problems like rising costs or declining margins before they hurt profitability.

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How do I handle per diem expenses for truck drivers?

Per diem for truck drivers covers meals and incidental expenses on the road. You can either reimburse actual expenses or use the IRS standard rate. Transportation workers get a special 80% deduction instead of the usual 50%.

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What bookkeeping system works best for restaurants?

Restaurants need a system that handles high transaction volume, integrates with your POS, and tracks tips accurately. QuickBooks Online with proper POS integration is typically the best fit for most restaurant operations.

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Oliver Bookkeeping Solutions offers monthly bookkeeping, payroll, and accounting services to small businesses in Benton County and across Northwest Arkansas.

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