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Some Tax Basics for Medical Professionals
By Edwin P. Morrow; III, JD, LLM, and ME-P Staff Writers
Astute financial advisors and healthcare focused accountants know that there are simple and overlooked strategies that can significantly add to the bottom line of any medical practice; just as much as increasing practice revenues or reducing expenses. Physicians and medical professionals themselves should also understand some basic accounting and simple tax strategies that do not require five figure consulting fees or excessive risks of audit. Here are some basic deduction concepts of financial accounting to know.
Commuting and Local Transportation Expenses
Normally, standard commuting expenses to and from the home are personal expenses and not deductible. You cannot deduct the cost of your daily commute to work. There are exceptions, however. Commuting expenses to a temporary location outside of the normal business metro area may be deductible; such as the hospital or ASC. Expenses traveling from one medical office business location to another are also deductible.
Life Insurance
Payments for life insurance are generally not excludible from income unless part of a medical group term life insurance policy with face amounts up to a maximum of $50,000 IRC § 79. Amounts of insurance greater than this amount will be taxable income to the employee (also subject to employment taxes).
Political Contributions
Political contributions in the recent elections cycle, for example, and lobbying expenses are not deductible, even if you can substantiate a direct medical business interest.
Professional Dues
Dues paid to professional organizations, like the AMA, ADA, AOA or APMA, are generally deductible. However, you may notice a disclaimer on some dues notices that indicate a portion of the dues used for political lobbying purposes, which are not deductible. Dues to country clubs, athletic facilities, etc … will not be deductible, unless eligible for the 50% entertainment deduction mentioned earlier.
Assessment
Physicians and all taxpayers should keep records showing the nature of the expense, when it was incurred, the amount, and the business purpose.
Conclusion
And so, your thoughts and comments on this Medical Executive-Post are appreciated. How have you used these strategies in the past?
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Healthcare Organizations: www.HealthcareFinancials.com
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Filed under: Accounting, Taxation | Tagged: tax deductions |
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Charitable Donations
During the year, many of us make donations to our favorite charities. Typically, the donations are made in cash or property. Property or non cash items are deductible up to their fair market value. The tax deductions for charitable contributions are limited to 50% of your adjusted gross income or 30% for appreciated property. However, if you volunteer your time you can deduct the mileage driving to the charity, which can be either 14 cents per mile for use of your automobile or the actual expense like your gas. Furthermore, you can deduct 100% of your out of pocket expenses, but not your actual time. It is recommended that you receive a receipt from the charity or be able to provide proof by bank check for deduction purpose.
Paying Expenses and Delaying Receivables
Paying expenses and depositing receivables is done on a routine basis. However, December is an excellent time to pay those expenses normally be paid in early January, in addition to buying items that can be deductible immediately. Also, you can delay posting receivables the last two weeks of December. This net effect will increase expenses and lower revenues for the current year.
-Amaury Cifuentes; CFP
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Are patient charity / no fee appointments tax deductible?
Thank you.
Erin Silver
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Erin,
Sorry no – and just think about it.
Mary
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