A 1099 Therapist’s (and all Mental Health Professionals) Guide to Quarterly Taxes (and How Much to Save)

Starting a therapist or mental health business/practice isn’t easy. If you’re working for yourself—whether you’re a solo practice owner or operate as a 1099 contractor—taxes don’t just show up in April. Instead, they show up four times a year! 

But don’t worry, quarterly taxes don’t have to feel confusing or overwhelming. With a simple system and a few helpful reminders, this can become one of those “adulting” tasks you have under control—easy financial planning for mental health practices.

Let’s break it all down.

What Are Quarterly Taxes (and Why You Need to Care)?

If you ever had a W-2 job in the past (as an employee), chances are you didn’t stare at your paystub too closely. As long as your paycheck hit your bank account, life was good! 

What you may not have realized is that behind the scenes, your former employer was quietly doing the heavy lifting:

• Withholding Federal and (if applicable) state income taxes 
• Paying half of your Social Security and Medicare (FICA) taxes
• Sending everything off to the IRS on your behalf
• Really, all of the financial planning for mental health practices that you didn’t catch. Of course, they may have outsourced financial planning, but the work was all done behind the scenes.

After, you simply received your pay after all the math was done.

But now? This all falls on It’s exactly as fun as it sounds (wink, wink).. 

As a 1099 contractor or solo practice owner, you’re now responsible for:

1. Estimating how much tax you owe
2. Saving for those taxes
3. Paying those taxes—quarterly

These are known as estimated quarterly tax payments, and the IRS expects you to make them if you’re earning income that isn’t getting automatically withheld for taxes. This also applies to your state if you live in a state with income tax.

If you skip payments (or underpay), you could be hit with penalties, interest, and plenty of unnecessary financial stress. No one wants that kind of surprise later in the year, or—really—ever!

So… How Much Should You Save for Taxes?

Ah yes, the million-dollar question. You’ll hear all kinds of opinions on this—from colleagues, family members, and even Reddit threads—so let me simplify things with two of the most practical approaches:

1. The “Rule of Thumb” Approach

A general rule is to save 25-30% of your net income for taxes. That’s net income, not gross!

Let’s say you bring in $10,000 in patient income for the month and have $2,000 in business expenses (office rent, EHR software, supplies, etc.). Your net income is $8,000. Based on the rule of thumb method, you should set aside $2,000-$2,400 of that for taxes. So essentially, your take-home pay is actually $5,600-$6,000 after setting aside those taxes.

This typically covers:

• Federal income tax
• Self-employment tax (Social Security & Medicare)
• State income tax (if applicable)

This approach can work well in the beginning, especially if your income is fairly steady and straightforward.

2. The More Accurate (and Less Stressful) Approach: Work with a Pro

Here’s the deal: taxes are not a one-size-fits-all. 

Some mental health businesses and professionals live in high-tax states, some don’t. Some have high expenses, others have very few. Income can fluctuate (hello summer slowdown). Everyone’s situation is different.

So if you want the most accurate estimate, hire a tax professional and/or financial advisor—we’d love to chat!

They (we) will help you:

• Estimate your tax payments based on your actual income, deductions, and tax bracket
• Adjust for changes throughout the year
• Set monthly savings targets
• Avoid underpaying or overpaying
• Knows what’s due and when - so you’re never caught off guard

As your income grows (or gets more complicated), this becomes even more valuable. Yes, it’s an expense, but it’s one that can save you money, time, and a lot of tax-season anxiety. So you can continue to have more time (and mental energy) to focus on what you do best - serving your clients and patients! 

What Can You Deduct to Reduce What You Owe?

Now for the part that doesn’t suck so much when it comes to taxes: deductions.

As a business owner, you can “deduct” a lot more than you could as a W-2 employee. Deductions are simply your expenses that are related to your business (business expenses). Deductions reduce your taxable income, which means a lower tax bill (Yes, please). 

Here are some common deductions for mental health businesses and professionals: 

• Office rent or home office portion (this is a big one)
• EHR software and any other tools & software you use (SimplePractice, TherapyNotes, etc.)
• Malpractice insurance
• Continuing education & license renewals
• Conferences, courses, and professional development
• Marketing, website, and online directories (like Psychology Today)
• Business-related phone & internet expenses
• Travel for business (airfare, lodging, meals)
• Supplies (testing materials, books, office equipment)
• Professional services (financial advisor, CPA, attorney)

So as you can see, there quite a bit that you can use to lower your tax bill, which is always nice! 

Just make sure you’re tracking everything throughout the year. The more organized you are, the less you’ll owe (and the easier it is to file your taxes). 

Need help setting this up? Check out my blog on Business Accounts, Bookkeeping & Paying Yourself as a Solo Therapist (and Mental Health Professional).

When (and How) to Make Quarterly Payments

Here are the typical IRS deadlines:

• April 15 - for income earned from January - March
• June 15 - for income earned from April - May
• September 15 - for income earned from June - August
• January 15 (next year) - for income earned from from September - December

These aren’t evenly spaced (you would think you’d have to file every three months for quarterly), but you know—the IRS just likes to keep you on your toes. 

As a side note: if the 15th falls on a weekend or holiday, the deadline moves to the next business day.

How to Pay

The IRS does actually make this part pretty easy (I guess they really want our money):

• Create a free IRS account at irs.gov/payments 
• Select “Estimated Tax Payment”
• Choose the correct tax year
• Use your checking/savings account (credit cards often come with fees)
• Keep your confirmation emails for proof

Note: If you live in a state with income tax, your state will usually have a separate online portal to do this.

Pro Tips to Keep It Simple Year Round

Here are some tips to keep it simple:

• Separate business and personal finances from day one
• Use a bookkeeping tool to track and categorize business income and expenses  (like Quickbooks)
• Automate tax savings: Set up a % transfer to a separate bank account each time you get paid
• Check in monthly to review your income, expenses, and how much you’ve saved for taxes
• Ask for help when you need it! Professionals such as financial advisors and tax professionals can help you take this off your plate. 

Final Thoughts

Quarterly taxes may never be your favorite part of running your practice—but they don’t have to be scary. With some structure, support, and systems in place, they become just another routine part of your business (like checking your schedule or writing session notes).

At Marrone Wealth Management, we specialize in helping 1099 and solo mental health professionals build financial systems that actually work—so you can focus on your clients, not the IRS. Think of us as subscription based financial planning, here so you can outsource your financial planning.

Let’s connect. You don’t have to do this alone.