Tax Deductions versus Tax Credits

By Staff Reporters

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What is a tax deduction?

A deduction reduces the amount of income you pay taxes on, which means you could pay less in taxes. You subtract deductions from your income before calculating how much taxes you owe. How much a deduction saves you depends on your income tax bracket.

To calculate how much a deduction could reduce your taxes, you multiply the amount of the deduction by your marginal tax rate. For example, if a deduction is worth $5,000 and you are in the 10% tax bracket (the lowest), the deduction would reduce your taxes by $500.

A deduction’s value to you is tied to your tax rate. So if you’re paying a higher tax rate, you can reap more of a deduction’s benefit. The lower your tax rate, the less benefit a deduction will have for you. Imagine that you take a $5,000 deduction, but you’re in the 35% tax bracket — the second highest. Now you’re saving $1,750 in taxes.

CITE: https://www.r2library.com/Resource/Title/082610254

What is a tax credit?

On the other hand, a credit is a dollar-for-dollar reduction in the amount of tax you owe. For example, if you qualify for a $1,000 tax credit of some kind and owe $5,000 in taxes, that credit will reduce your tax burden to $4,000.

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But – Do Not Claim Too Many Tax Deductions

Deductions are enticing to taxpayers because they can reduce the amount of your income before you calculate the tax you owe, which in turn might significantly lower how much you have to pay in taxes or increase your refund. But that doesn’t mean you should go wild writing things off on your tax returns, as experts say claiming too many deductions is the most common reason people end up getting audited by the IRS.

Don’t try writing off deductions that are no longer accepted by the IRS. The tax code has changed over the years, and there are some things the tax agency no longer recognizes. You should remember that some of the tax write-offs were terminated by the IRS, including deductions on alimony, moving expenses, and any expenses related to investing, hobbies, and tax preparation.

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Income Tax Brackets for 2021

By Staff Reporters

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CITE: https://www.r2library.com/Resource/Title/082610254

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If taxable income is:The tax due is:
Under $9,95010% of the taxable income
Over $9,950 but under or equal to $40,525$995 plus 12% of the excess over $9,950
Over $40,525 but under or equal to $86,375$4,664 plus 22% of the excess over $40,525
Over $86,375 but under or equal to $164,925$14,751 plus 24% of the excess over $86,375
Over $164,925 but under or equal to $209,425$33,603 plus 32% of the excess over $164,925
Over $209,425 but under or equal to $523,600$47,843 plus 35% of the excess over $209,425
Over $523,600$157,804.25 plus 37% of the excess over $523,600

,

If taxable income is:The tax due is:
Not over $9,95010% of the taxable income
Over $9,950 but under or equal to $40,525$995 plus 12% of the excess over $9,950
Over $40,525 but under or equal to $86,375$4,664 plus 22% of the excess over $40,525
Over $86,375 but under or equal to $164,925$14,751 plus 24% of the excess over $86,375
Over $164,925 but under or equal to $209,425$33,603 plus 32% of the the excess over $164,925
Over $209,425 but under or equal to $314,150$47,843 plus 35% of the excess over $209,425
Over $314,150$84,496 plus 37% of the excess over $314,150

,

If taxable income is:The tax due is:
Not over $19,90010% of the taxable income
Over $19,900 but under or equal to $81,050$1,990 plus 12% of the excess over $19,900
Over $81,050 but under or equal to $172,750$9,328 plus 22% of the excess over $81,050
Over $172,750 but under or equal to $329,850$29,502 plus 24% of the excess over $172,750
Over $329,850 but under or equal to $418,850$67,206 plus 32% of the excess over $329,850
Over $418,850 but under or equal to $628,300$95,686 plus 35% of the excess over $418,850
Over $628,300$168,993.50 plus 37% of the excess over $628,300

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If taxable income is:The tax due is:
Not over $14,20010% of the taxable income
Over $14,200 but under or equal to $54,200$1,420 plus 12% of the excess over $14,200
Over $54,200 but under or equal to $86,350$6,220 plus 22% of the excess over $54,200
Over $86,350 but under or equal to $164,900$13,293 plus 24% of the excess over $86,350
Over $164,900 but under or equal to $209,400$32,145 plus 32% of the the excess over $164,900
Over $209,400 but under or equal to $523,600$46,385 plus 35% of the excess over $209,400
Over $523,600$156,355 plus 37% of the excess over $523,600

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IRS & PHYSICIANS: Married Filing Separately May Save Taxes?

By Staff Reporters

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The IRS considers taxpayers married if they are legally married under state law, live together in a state-recognized common-law marriage, or are separated but have no separation maintenance or final divorce decree as of the end of the tax year.

CITE: https://www.r2library.com/Resource/Title/082610254

Of the 150.3 million tax returns filed in 2016, the latest year for which the IRS has published statistics, 3.07 million belonged to twosomes who filed separately.

  • These partners reported individual income and expenses on individual tax returns.
  • They had to agree on either itemizing expenses or using the standard deduction.
  • By filing separately, their similar incomes, miscellaneous deductions or medical expenses likely helped them save taxes.

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Consequences of Filing Married Separate | SC Associates

Filing separately with similar incomes

A couple may pay the IRS less by filing separately when both physician spouses work and earn about the same amount.

  • When they compare the tax due amount under both joint and separate filing statuses, they may discover that combining their earnings puts them into a higher tax bracket.
  • Their savings depends on a variety of other factors, however, including their investment situation and whether they have children.
  • The “married filing separately” status cuts the deductions for IRA contributions and eliminates certain tax credits, among other tax breaks.

Using miscellaneous deductions by filing separately (for tax years prior to 2018)

Miscellaneous deductions can lower taxable income, but in order to enter them on Schedule A, they must add up to more than 2% of adjusted gross income (AGI).

  • Physician or other spouses with union dues, job-search costs, tax-preparation fees and un-reimbursed business expenses may find their miscellaneous deductions don’t qualify when their higher combined income raises their AGI.
  • A spouse who travel frequently for business could rack up a sizable tally in airline fees for baggage and itinerary changes that makes the miscellaneous deduction worth pursuing.

Beginning in 2018, these types of miscellaneous expenses are no longer deductible.

Filing separately to save with unforeseen expenses

Adjusted gross income also determines if a couple can use un-reimbursed health care costs and casualty losses on Schedule A to save taxes.

  • Unless out-of-pocket medical expenses exceed 7.5% of AGI for 2021, they don’t qualify as a deduction.
  • Casualty losses must also total more than 10% of AGI and occur in a federally declared disaster area.

The spouse with the loss or substantial medical outlay calculates deductibility against his or her own lower AGI when the couple files separate returns. When one spouse can lower taxable income this way, married filing separately might trim a couple’s overall tax burden.

Filing separately to guard the future

When you don’t want to be liable for your partner’s tax bill, choosing the married-filing-separately status offers financial protection: the IRS won’t apply your refund to your spouse’s balance due. Separate returns make sense to prevent the IRS from seizing a spouse’s tax refund when the other has fallen behind on child support payments.

Couples in the process of divorcing may shun joint returns to avoid post-divorce complications with the IRS, while a spouse who questions her partner’s tax ethics may feel more comfortable living a separate tax life.

Couples living in community-property states should consider state law when deciding how to file.

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UPDATE: IRS Interest Rates Rising, Currency Inflation and Upcoming Earning Reports, etc.

By Staff Reporters

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IRS: The IRS sent out a notice on February 23rd, warning taxpayers about a price hike coming in the next few months. The tax agency said that interest rates will increase for the calendar quarter starting April 1st, 2022. You can accrue interest on two types of payments: over-payment or underpayment. So starting in April, over-payments will have an interest rate of 4 percent, except for corporations which will earn a 3 percent rate and a 1.5 percent rate for the portion of a corporate over-payment that exceeds $10,000. In terms of underpayments, the interest rate will increase to 4 percent overall and 6 percent for large corporate underpayments.

“Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis,” the IRS website explained. The tax agency did not change interest rates in this last quarter, which began Jan. 1, 2022. Before they get changed in April, the rates are currently 3 percent for general over-payments and 2 percent for corporation over-payments, with a 0.5 percent rate for the portion of a corporate over-payment exceeding $10,000. The underpayment interest is 3 percent right now, expect for large corporations which have a 5 percent rate.

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CURRENCY INFLATION: Inflation may occur when the Federal Reserve, or another central bank, adds fiat currency into circulation at a rate that exceeds that of the economy’s growth rate. That creates a situation in which there are more dollars bidding on fewer goods and services. The result is that goods and services cost more. One reason that inflation has been a constant in the US since 1933 is that the FOMC has continually increased the money supply. In response to the 2008 financial crisis, the Fed dropped its lending rate close to zero as a way to inject more liquidity into the economy, which led to increased inflation but not hyperinflation. While those increases have usually moved in step with growth, that hasn’t always been the case.

CITE: https://www.r2library.com/Resource/Title/0826102549

And so, in response to the COVID-19 pandemic and subsequent lock-downs, the Federal Reserve released the equivalent of $3.8 trillion in new liquidity in 2020. That amount was equal to roughly 20% of the dollars previously in circulation. And it is one reason why many investors were watching the CPI closely in 2021.

EARNING REPORTS:

Monday: India GDP data; Earnings from Lordstown Motors, Groupon, HP, SmileDirectClub and Zoom Video

Tuesday: US and China manufacturing data; Earnings from AutoZone, Baidu, Domino’s Pizza, Hostess Brands, J.M. Smucker, Kohl’s, Target, AMC Entertainment and Salesforce

Wednesday: European inflation data; Earnings from Abercrombie & Fitch, Dine Brands, Dollar Tree, Snowflake and Victoria’s Secret

Thursday: ISM Non-Manufacturing Index; Earnings from Best Buy, Weibo, Costco and Gap

Friday: US jobs report

10-Year: Treasuries rallied to 1.902%.

Oil: The rise in oil prices is spilling over at the gas pump: The average gas price in the US has jumped 10 cents, to $3.64/gallon, in the past two weeks.

Partial SWIFT ban: Western governments put aside their hesitations and proposed banning some Russian lenders from SWIFT, the global messaging service that facilitates cross-border transactions. It’s a move that could cause turmoil across global financial markets.

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CURRENCY: Devaluation versus Depreciation

KNOW THE FINANCIAL DIFFERENCE

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BY DR. DAVID E. MARCINKO MBA CPM®

INVITE: https://medicalexecutivepost.com/dr-david-marcinkos-bookings/

Competitive World 27

CMP logo

SPONSOR: http://www.CertifiedMedicalPlanner.org

Devaluation is the deliberate downward adjustment of the value of a country’s money related to another currency, group of currencies or currency standard. It is often confused with depreciation and is the opposite of revaluation which refers to the readjustment of a currency exchange rate.

CITE: https://www.r2library.com/Resource/Title/0826102549

Definition

The government of a country may decide to devalue its currency and like depreciation it is not the result of non-governmental activities.

One reason a country made devalue its currency is to combat a trade imbalance. Devaluation reduces the cost of a country’s export rendering them more competitive in the Global market which is which in turn increases the cost of imports.

If imports are more expensive domestic consumers are less likely to purchase them further strengthening domestic businesses because exports increase and imports decrease there is typically a better balance of payments because the trade deficit shrinks. In short a country that devalue its currency can produce is difficult because there is a greater demand for cheaper exports.

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Advantages and disadvantages of devaluation - Economics Help

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In accountancy, depreciation refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used (depreciation with the matching principle).

Depreciation is thus the decrease in the value of assets and the method used to reallocate, or “write down” the cost of a tangible asset (such as equipment) over its useful life span. Businesses depreciate long-term assets for both accounting and tax purposes. The decrease in value of the asset affects the balance sheet of a business or entity, and the method of depreciating the asset, accounting-wise, affects the net income, and thus the income statement that they report.

CITE: https://www.r2library.com/Resource/Title/0826102549

Generally, the cost is allocated as depreciation expense among the periods in which the asset is expected to be used.

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ORDER TEXT: https://www.routledge.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

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ALTERNATIVE MINIMUM TAX: Physicians Beware!

By Staff Reporters

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Alternative Minimum Tax

DEFINITION: The alternative minimum tax (AMT) is a tax imposed by the United States federal government in addition to the regular income tax for certain individuals, estates, and trusts. As of tax year 2018, the AMT raises about $5.2 billion, or 0.4% of all federal income tax revenue, affecting 0.1% of taxpayers, mostly in the upper income ranges.

CITE: https://www.r2library.com/Resource/Title/0826102549

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See the source image

Key Takeaways

  • The alternative minimum tax (AMT) ensures that certain taxpayers pay their fair share of income taxes.
  • However, the structure was not indexed to inflation or tax cuts. …
  • For those subject to AMT, there are certain strategies that can be employed to reduce your exposure to this tax.

MORE: https://www.forbes.com/sites/kellyphillipserb/2020/09/11/your-first-look-at-2021-tax-rates-projected-brackets-standard-deductions–more/?sh=119ff37413ba

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IRS Tax Reduction Issues for Self-Employed Physician Executives

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By Dr. David Edward Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org


INTRODUCTION

Whether you do contract work or have your own small business, tax deductions for the self-employed physician consultant and/or medical executive or nurse consultant, etc., can add up to substantial tax savings.

Welcome Tax Season: https://www.msn.com/en-us/money/taxes/tax-season-2022-irs-now-accepting-tax-returns-what-to-know-before-filing-taxes-about-your-refund/ar-AAT53rR?li=BBnb7Kz


With self-employment comes freedom, responsibility, and a lot of expense. While most self-employed people celebrate the first two, they cringe at the latter, especially at tax time. They might not be aware of some of the tax write-offs to which they are entitled.

When it comes time to file your returns, don’t hesitate to claim the benefits you get for being the boss. As a self-employed success story, you’ve earned them.

FORM 1099 NEC: Form 1099 NEC is one of several IRS tax forms used in the United States to prepare and file an information return to report various types of income other than wages, salaries, and tips. The term information return is used in contrast to the term tax return although the latter term is sometimes used colloquially to describe both kinds of returns.

READ: https://turbotax.intuit.com/tax-tips/self-employment-taxes/how-to-file-taxes-with-irs-form-1099-misc/L3UAsiVBq?tblci=GiC9aWPDzN9yXLpSuE8LDo3YRMDPuoFwO9ycCY6qixKJ8CC8ykEo94-H7prplp7cAQ

CITE: https://www.r2library.com/Resource/Title/082610254

“Many times an overlooked deduction is educational expenses. If one is taking courses or buying research material to be more effective in their work, this can be deductible.”

Individual Retirement Plans (IRAs)

One of the best tax write-offs for the self-employed physician consultant is a retirement plan. A person with no employees can set up an individual 401 (k). “You can contribute $19,500 in 2021 as a 401(k) deferral, plus 25 percent of net income.”

If you have employees, consider a SIMPLE (Savings Incentive Match Plan for Employees) IRA—an IRA-based plan that gives small employers a simplified method to make contributions to their employees’ retirement. As of 2021, an employee may defer up to $13,500 and employees over 50 may contribute an additional $3,000.

“A third retirement plan is Simplified Employee Pension IRA (SEP IRA).” The employer may contribute the lesser of 25 percent of income or $58,000 in 2021. If the employer has eligible employees, an equal percentage of their income must be contributed.

Recall that retirement plans are “absolutely the No. 1 tax deduction. The government is helping fund retirement.”

Business use of home or dwelling

Now, most self-employed taxpayers’ businesses start as home-based businesses. These people need to know portions of business costs are deductible and so “It is very important that you keep track of expenses relating to your housing costs.”

If your gross income from your business exceeds your total expenses, then you can deduct all of your expenses related to the business use of your home. If your gross income is less than your total expenses, your deduction will be limited to the difference between your gross income and the sum of all business expenses you would pay if the business was not in your home. Those expenses could include telephone lines, the Internet, and other costs to do business.

You must also have a home office that is truly used for work and the Internal Revenue Service may require you to document this.

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Deducting automobile expenses

If you travel for business, even short distances within your own city, you may deduct the dollar value of business miles traveled on your tax return. The taxpayer may file the actual expense s/he incurred, or use the standard mileage rate prescribed by the IRS, which is 56 cents as of 2021. The IRS allowable mileage rates should be checked every year as they can change.

“If you decide to use actual car expenses, be sure to include payments, depreciation, registration, insurance, garage rent, licenses, repairs and maintenance, and parking and toll fees.” AND, “If you decide to use the standard mileage rate, it would be in your best interest to keep a log—daily, weekly or monthly—of miles driven to distinguish personal use from business use.”

Depreciation of property and equipment

Some self-employed people may purchase property and equipment for a business. If they expect that property to last longer than one year, it should be depreciated on the tax return.

Claims regarding property, according to the IRS, must meet the following criteria: You must own the property and it must be used or held to generate income. The property should have an estimated useful life, meaning you should be able to guess how long you can generate income with it. It may not have a useful life of one year or less, and may not be purchased and disposed of in the same year.

Certain repairs on property used for business may also be deducted.

Educational expenses

Any educational expense is potentially tax-deductible.

“Many times an overlooked deduction is educational expenses. “If one is taking courses or buying research material to be more effective in their work, this can be deductible.”

Think about any books, web courses, local college courses, or other classes or materials that you have purchased to improve your job or business. It’s easy to forget a work-related webinar or business e-book that was purchased online, so remember to save e-receipts.

Also recall that subscriptions to trade or professional publications and donations to business organizations, both of which are frequently necessary for the continuation and growth of your business.

Other areas to explore

Other deductions that can be easily missed are advertising and promotional expenses, banking fees, and air, bus, or train fare. Restaurant meals and other entertainment costs may be written off as long as they are necessary business expenses.

And, consider health insurance premiums, which in most cases represent a credit rather than a tax deduction. “A credit goes directly against one’s taxes, rather than a reduction of income.”

Regardless of which expenses you discover that you may write off, the most important thing is to keep accurate records throughout the year. Save receipts, including e-mail receipts, and file or log them so you have easy access to them at tax time. Not only does keeping receipts, mileage logs, and other expense records make filing taxes easier, but it also facilitates a system that allows you to track changes from year to year.

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Long-term tax-saving strategies

Don’t just look at last-minute write-offs when considering self-employment tax deductions. Think about laying down some long-term strategies for money savings from year to year—particularly if you are a high earner.

“Accountants typically tell you what you have to pay but they don’t always tell you strategies to reduce your payments.”

To reduce your gross taxable income, consider setting up a defined-benefit pension plan. This plan is based on your age and income: The older you are and the higher your earnings, the more you are allowed to contribute. An alternative plan is an age-weighted profit-sharing plan, which is similar and can benefit those who have several employees.

Another strategy for high-earning business owners who own their own building through a limited liability company or similar business structure is to pay themselves rent. This rent is used to pay down the mortgage, but it is also considered a business expense for tax purposes.

Self-employed professionals required to have liability insurance should consider setting up their own insurance company. A captive insurance company is one that insures the risks of the business—or businesses, in the case of a cooperative. Its premiums can be tax-deductible.

But, if money accumulates and claims are minimal, the money taken out is taxable under capital gains. This is not a retirement strategy, but that it can save you money by allowing you to “pay yourself” instead of an insurance company and still deduct the premiums.

Assessment

With any of these more complicated, long-term strategies, consult with a business attorney, CPA/EA or financial planner to ensure you have the best plan possible for your business.

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CAPITAL GAINS UPDATE: https://wordpress.com/post/medicalexecutivepost.com/251470

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

ORDER: https://www.amazon.com/Business-Medical-Practice-Transformational-Doctors/dp/0826105750/ref=sr_1_9?ie=UTF8&qid=1448163039&sr=8-9&keywords=david+marcinko

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2021 TAXES: 8 Things All Physicians Must Know

By Staff Reporters

CITE: https://www.r2library.com/Resource/Title/082610254

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Here are eight things to keep in mind as you prepare to file your 2021 taxes.

1. Income tax brackets have shifted a bit

There are still seven tax rates, but the income ranges (tax brackets) for each rate have shifted slightly to account for inflation. For 2021, the following rates and income ranges apply:

Tax rateTaxable income brackets: Single filersTaxable income brackets: Married couples filing jointly (and qualifying widows or widowers) 
10%$0 to $9,950$0 to $19,900
12%$9,951 to $40,525$19,901 to $81,050
22%$40,526 to $86,375$81,051 to $172,750
24%$86,376 to $164,925$172,751 to $329,850
32%$164,926 to $209,425$329,851 to $418,850
35%$209,426 to $523,600$418,851 to $628,300
37%$523,601 or more$628,301 or more

Source: Internal Revenue Service

2. The standard deduction has increased slightly

After an inflation adjustment, the 2021 standard deduction has increased slightly to $12,550 for single filers and married couples filing separately and $18,800 for single heads of household, who are generally unmarried with one or more dependents. For married couples filing jointly, the standard deduction has risen to $25,100.

3. Itemized deductions remain the same

For most filers, taking the higher standard deduction is more practical and saves the hassle of keeping track of receipts. But if you have enough tax-deductible expenses, you might benefit from itemizing.

The following rules for itemized deductions haven’t changed much for 2021, but they’re still worth pointing out.

  • State and local taxes: The deduction for state and local income taxes, property taxes, and real estate taxes is capped at $10,000. 
  • Mortgage interest deduction: The mortgage interest deduction is limited to $750,000 of indebtedness. But people who had $1,000,000 of home mortgage debt before December 16, 2017, will still be able to deduct the interest on that loan. 
  • Medical expenses: Only medical expenses that exceed 7.5% of adjusted gross income (AGI) can be deducted in 2021. 
  • Charitable donations: The cash donation limit of 100% of AGI remains in place for 2021, if donations were made to operating charities.1
  • Miscellaneous deductions: No miscellaneous itemized deductions are allowed. 
     

4. IRA and 401(k) contribution limits remain the same 

The traditional IRA and Roth contribution limits in 2021 remain the same as in 2020. Individuals can contribute up to $6,000 to an IRA, and those age 50 and older also qualify to make an additional $1,000 catch-up contribution. If you’re able to max out your IRA, consider doing so—you may qualify to deduct some or all of your contribution.

The 2021 contribution limit for 401(k) accounts also stays at $19,500. If you’re age 50 or older, you qualify to make an additional $6,500 catch-up contribution as well.

5. You can save a bit more in your health savings account (HSA) 

For 2021, the max you can contribute into an HSA is $3,600 for an individual (up $50 from 2020) and $7,200 for a family (up $100). People age 55 and older can contribute an extra $1,000 catch-up contribution.

To be eligible for an HSA, you must be enrolled in a high-deductible health plan (which usually has lower premiums as well). Learn more about the benefits of an HSA

6. The Child Tax Credit has been expanded 

For 2021, the American Rescue Plan Act (ARPA) has temporarily modified the Child Tax Credit requirements and amounts for household incomes below $75,000 for single filers and $150,000 for married filing jointly. 

First, the ARPA has raised the age limit for dependents from 16 to 17. In addition, the child tax credit has increased from $2,000 to $3,000 for children age 6 through 17 and up to $3,600 for children under 6. If your income exceeded the above limits but was below $200,000 for single filers or $400,000 for joint filers, you’ll receive the standard child tax credit of $2,000 per child. 

The IRS began sending monthly advance Child Tax Credit payments to eligible families in July and sent its last advance in December. If your dependent didn’t qualify for the child tax credit, you may still qualify for up to $500 of tax credits under the “credit for other dependents” (see IRS Publication 972 for more details). Tax credits, which reduce the tax you owe dollar for dollar, are generally better than deductions, which reduce your taxable income. 

7. The alternative minimum tax (AMT) exemption has gone up

Until the AMT exemption enacted by the Tax Cuts and Jobs Act expires in 2025, the AMT will continue to affect mostly households with incomes over $500,000. Still, the AMT has investment implications for some high earners. 

For 2021, the AMT exemptions are $73,600 for single filers and $114,600 for married taxpayers filing jointly. The phase-out thresholds are $1,047,200 for married taxpayers filing a joint return and $523,600 for all other taxpayers.  

8. The estate tax exemption is even higher

The estate and gift tax exemption, which is indexed to inflation, has risen to $11.7 million for 2021. But the now-higher exemption is set to expire at the end of 2025, meaning it could be essentially cut in half at that time if Congress doesn’t act. 

The annual gift exclusion, which allows you to give money to your loved ones each year without incurring any tax liability or using up any of your lifetime estate and gift tax exemption, stays at $15,000 per recipient.

Don’t get caught off guard

As you prepare to file your taxes for 2021, here are a few additional items to consider. 

  • If you’re not retired, the 10% early withdrawal penalty that was waived for retirement account distributions in 2020 has been reinstated for 2021.
  • If you’re age 72 or older, make sure you’ve taken your required minimum distribution (RMD) from your retirement accounts or else you face a 50% penalty on any undistributed funds (unless it’s your first RMD, in which case, you can wait until April 1, 2022).

If you haven’t contributed to your retirement accounts already, now is the time. Review your earnings for the year and take advantage of any deductions that can lower your tax bill. Also, keep an eye on Washington for any last-minute tax changes that could affect your return before you file. Tax season will be here before you know it, and it’s never too early to start preparing.

1Operating charities, or qualifying public charities, are defined by Internal Revenue Code section 170(b)(1)(A). You can use the Tax Exempt Organization Search tool on IRS.gov to check an organization’s eligibility.

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MORE: https://www.msn.com/en-us/money/taxes/a-historically-underfunded-irs-is-preparing-for-a-rough-tax-season-and-only-has-1-person-for-every-16000-calls-it-gets/ar-AASFVds?li=BBnb7Kz

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2021-Tax Hits on Distributed Stock Market Gains

Doctors Must Understand the Tax Man

By Staff Reporters

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Mutual-fund physician and other investors with holdings in taxable accounts need to prepare for a tax hit on distributed gains — even if they reinvest the distributions. They can offset some or all of the gains (and taxes) if they’ve sold positions at a loss.

CITE: https://www.r2library.com/Resource/Title/082610254

Physicians and people who own mutual funds in tax-sheltered accounts such as 401(k)s or individual retirement accounts and are reinvesting the distributions, on the other hand, don’t have to worry. In those accounts, taxes only count when investors sell holdings in retirement, and those who have funds in qualified Roth IRAs won’t have to pay even then.

MORE: https://www.marketwatch.com/story/brace-yourself-for-an-extra-tax-hit-from-large-mutual-fund-payouts-11639175633?mod=home-page

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On the TAXATION of Capital Gains and Losses

UPDATE FOR PHYSICIANS AND ALL INVESTORS

By Dr. David E. Marcinko MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Almost everything you own and use for personal or investment purposes is a capital asset. Examples include a home, personal-use items like household furnishings, and stocks or bonds held as investments. When you sell a capital asset, the difference between the adjusted basis in the asset and the amount you realized from the sale is a capital gain or a capital loss.

CITE: https://www.r2library.com/Resource/Title/0826102549

Generally, an asset’s basis is its cost to the owner, but if you received the asset as a gift or inheritance, refer to Topic No. 703 for information about your basis.

For information on calculating adjusted basis, refer to Publication 551, Basis of Assets. You have a capital gain if you sell the asset for more than your adjusted basis. You have a capital loss if you sell the asset for less than your adjusted basis. Losses from the sale of personal-use property, such as your home or car, aren’t tax deductible.

IRS: https://www.irs.gov/taxtopics/tc409

MORE: https://medicalexecutivepost.com/2021/04/23/bidens-capital-gains-tax-proposal/

RELATED: https://medicalexecutivepost.com/2021/05/01/capital-gains-tax-non-sense/

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What is GAAP?

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HOW IT WORKS

By Dr. David E. Marcinko MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Generally Accepted Accounting Principles

As a new physician investor, it’s important to know the distinctions between like measurements because the market allows firms to advertise their numbers in ways not otherwise regulated. Often companies will publicize their numbers using either GAAP or non-GAAP measures. GAAP, or generally accepted accounting principles, outlines rules and conventions for reporting financial information. It is a means to standardize financial statements and ensure consistency in reporting.

When a company publicizes its earnings and includes non-GAAP figures, it means it wants to provide investors with an arguably more accurate depiction of the company’s health (for instance, by removing one-time items to smooth out earnings). However, the further a company deviates from GAAP standards, the more room is allocated for some creative accounting and manipulation.

When looking at a company that is publishing non-GAAP numbers, new physician investors should be wary of these pro forma statements, because they may differ greatly from what GAAP deems acceptable.

CITE: https://www.r2library.com/Resource/Title/0826102549

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The Core GAAP Principles

GAAP is set forth in 10 primary principles, as follows:

  1. Principle of consistency: This principle ensures that consistent standards are followed in financial reporting from period to period.
  2. Principle of permanent methods: Closely related to the previous principle is that of consistent procedures and practices being applied in accounting and financial reporting to allow comparison.
  3. Principle of non-compensation: This principle states that all aspects of an organization’s performance, whether positive or negative, are to be reported. In other words, it should not compensate (offset) a debt with an asset.
  4. Principle of prudence: All reporting of financial data is to be factual, reasonable, and not speculative.
  5. Principle of regularity: This principle means that all accountants are to consistently abide by the GAAP.
  6. Principle of sincerity: Accountants should perform and report with basic honesty and accuracy.
  7. Principle of good faith: Similar to the previous principle, this principle asserts that anyone involved in financial reporting is expected to be acting honestly and in good faith.
  8. Principle of materiality: All financial reporting should clearly disclose the organization’s genuine financial position.
  9. Principle of continuity: This principle states that all asset valuations in financial reporting are based on the assumption that the business or other entity will continue to operate going forward.
  10. Principle of periodicity: This principle refers to entities abiding by commonly accepted financial reporting periods, such as quarterly or annually.

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Two Vital IRS Audit Flags for Physicians

For Doctors and all Investors

By Hayden Adams

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Red Flag #1: Under reporting income

Generally speaking, all income is taxable unless it’s specifically excluded, as is the case with certain gifts and inheritances. In most instances, the income you earn will be reported to both you and the government on an information return, such as a Form 1099 or W-2. If the income you report doesn’t match the IRS’s records, you could face problems down the road—so be sure you include the income from all of the following forms that are applicable to your situation:

  • 1099-B: The form on which financial institutions report capital gains.
  • 1099-DIV: The form on which financial institutions report dividends.
  • 1099-MISC: The form used to report various types of income, such as royalties, rents, payments to independent contractors, and numerous other types of income.
  • 1099-R:The form on which financial institutions report withdrawals from tax-advantaged retirement accounts.
  • Form 1099-INT: The form on which financial institutions report interest income.
  • Form SSA-1099:The form on which the Social Security Administration reports Social Security benefits (a portion of which may be taxable, depending on your level of income).
  • Form W-2:The form on which employers report total annual compensation, payroll taxes, contributions to retirement accounts, and other information.

If you receive an inaccurate statement of income, immediately contact the responsible party to request a corrected form and have them resend the documents to both you and the IRS as soon as possible to avoid delaying your tax return. Also, be aware that you must report income for which there is no form, such as renting out your vacation home.

CITE: https://www.r2library.com/Resource/Title/0826102549

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Red Flag #2: Misreporting investment gains

When you sell an investment, you’ll need to know both the cost basis (what you paid for the investment) and the sale price to determine your net gain or loss. The cost basis of your investment may need to be adjusted to account for commissions, fees, stock splits, or other events, which could help reduce your taxable gain or increase your net loss.

Financial institutions are required to adjust your investments’ cost basis and provide that information on a Form 1099. However, brokerages aren’t required to report the cost basis for investments purchased prior to a certain date, which means you’ll be responsible for supplying that information (see the table below). Be sure to keep records of all investment purchases and sales—even those for which your brokerage is responsible.

Your reporting responsibility

Depending on security type and date of purchase, you—rather than your brokerage—could be responsible for reporting the cost basis of your investment to the IRS.

CITE: https://www.r2library.com/Resource/Title/0826102549

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Security typeInvestor’s responsibility if
Stocks (including real estate investment trusts)Acquired before 01/01/2011
Mutual funds, exchange-traded funds, and dividend reinvestment plansAcquired before 01/01/2012
Other specified securities, including most bonds, derivatives, and options

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What is the “SAVER’S CREDIT”?

By Dr. David E. Marcinko MBA CMP®

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Sponsor: http://www.CertifiedMedicalPlanner.org

The saver’s credit is a tax credit that’s intended to promote retirement savings among low- and moderate-income workers. It can reduce an eligible taxpayer’s federal income taxes when they save in a qualified retirement plan. It may be especially useful to medical students, nurses, interns, residents and fellows.

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IRS Releases Plan Limits for 2020 - Montgomery Retirement Plan Advisors

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In 2021, the maximum credit is worth $1,000 for individuals and $2,000 for married couples filing jointly, although it phases out for higher earners. To qualify for the credit, individuals must have an adjusted gross income of $32,500 or less. The income threshold for married couples is $65,000.

Because the credit is non-refundable, eligible taxpayers are able to use it to effectively reduce their tax bill to zero – but it cannot provide them with a tax refund.

IRS: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit

CITE: https://www.r2library.com/Resource/Title/0826102549

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PERSONAL FINANCIAL ACCOUNTING AND INCOME TAXATION FOR DOCTORs

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A SPECIAL ME-P REPORT

[The Ethical Pursuit of Tax Reduction and Avoidance]

perry-dalessio-cpa

[By Perry D’Alessio CPA]

The objective of tax planning is to arrive at the lowest overall tax cost on the activities performed.  In as much as physicians constitute 14% of the so-called and maligned “one-percenters” [$388,905 earned-not passive income/year]; this essay will address some methods and strategies to reduce federal and state income taxes. It is applicable to all physicians and medical professionals; as independent practitioners or employees.

So, how much in income taxes do the wealthy pay? The top 10 percent of taxpayers paid over 70 percent of the total amount collected in federal income taxes in 2010, the latest year figures are available, according to the Tax Foundation, a think tank that advocates for lower taxes. That’s up from 55 percent in 1986. The remaining 90 percent bore just under 30 percent of the tax burden. And, 47 percent of all Americans pay hardly anything at all.

Realize, that’s just federal income tax and doesn’t include payroll tax for Social Security and Medicare (which the vast majority of people pay), plus state taxes and all of the other taxes we face. When you add them all together; using figures from the Tax Policy Center and the Institute on Taxation and Economic Policy. Earners in the top 1 percent pay about 43 percent of their incomes in tax. People in the middle quintile pay 25 percent while the poorest fifth pays 13 percent.

Finally, before you assume these one- and 10-percenters are living on luxury yachts and in million-dollar mansions, consider how little money it takes to be a top wage earner.

According to 2011 IRS data, the top 1 percent have adjusted gross incomes of $388,905 per year or more. To be in the top 10 percent, you need an adjusted gross income of just $120,136 or more. These are good incomes to be sure, but definitely not enough to be out work, or the medical office, for more than a few weeks each year.

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Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners(TM)

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Now consider the following more specifically:

  • 42 percent of all federal tax revenue came from individual income taxes in 2010 and it has been the largest single source of revenue since 1950.
  • Individuals paid more than $2.2 trillion in 2010.
  • Bush-era tax cuts have finally expired, giving us the 20th century tax rates with the top income tax rate of 39.6%, we have not seen rates this high in almost 15 years.
  • 39.6% tax rate kicks in at $400,000 for individual taxpayers and $450,000 for married couples filing jointly.
  • Taxpayers who make over $200,000 ($250,000 for married taxpayers) will be subject to the Medicare surtax. If that’s you, Medicare surtax will be tacked on to your wages, compensation, or self-employment income over that amount. The amount of the surcharge is .9%. 
  • Net Investment Income Tax (NIIT) new as of 2013; if you have both net investment income and modified adjusted gross income (MAGI) of at least $200,000 for an individual taxpayer and $250,000 for taxpayers filing as married an additional 3.8 percent of the net investment income is an added tax. 

ASSESMENT

So, where do you fall on this schematic, doctor?

Channel Surfing

Have you visited our other topic channels? Established to facilitate idea exchange and link our community together, the value of these topics is dependent upon your input. Please take a minute to visit. And, to prevent that annoying spam, we ask that you register.

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ABOUT

Perry D’Alessio has twenty years’ experience in public accounting. He specializes in the taxation of closely held businesses and their owners, as well as high wealth individuals. He has a broad range of experience that includes individual, corporate, partnership, fiduciary, estate, and gift taxation. Business development has also been a focus. Particularly in the Healthcare and Fitness Industry, he worked with successful entities whose emphasis was on growth through development of strategic relationships and unit building.  Mr.  D’Alessio received his Bachelor of Business Administration degree in Accounting from Baruch College. He is a Certified Public Accountant in New York. He is a member of the American Institute of Certified Public Accountants (AICPA), the New York State Society of Certified Public Accountants (NYSSCPA). He served on several New York State Society tax committees including: PCAOB and HealthCare. Mr. D’Alessio presents at financial and medical associations throughout the region, and authored a book chapter in the “Financial Management Strategies for Hospitals and Healthcare Organizations” for the Institute of Medical Business Advisors, Inc.

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Understanding Healthcare Employment Benefits that are NOT Taxed at Full Economic Value

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On Entirely Legal AUTOMOBILE Employment Fringe Benefit Strategies 

[By Perry Dalessio CPA]

perry-dalessio-cpaWhen an employment fringe benefit does not qualify for exclusion under a specific statute or regulation, the benefit is considered taxable to the recipient.  It is included in wages for withholding and employment-tax purposes, at the excess of its fair market value over any amount paid by the employee for the benefit.

Examples:

For example, hospitals often provide automobiles for use by employees. Treasury regulations exclude from income the value of the following types of vehicles’ use by an employee:

  • Vehicles not available for the personal use of an employee by reason of a written policy statement of the employer
  • Vehicles not available to an employee for personal use other than commuting (although in this case commuting is includable)
  • Vehicles used in connection with the business of farming [in which case the exclusion is equal to the value of an arbitrary 75% of the total availability for use, and the value of the balance may be includable or excludable, depending upon the facts (Treas. Regs. § 1.132-5(g)) involved)]
  • Certain vehicles identified in the regulations as “qualified non-personal-use vehicles,” which by reason of their design do not lend themselves to more than a de minimus amount of personal use by an employee [examples are ambulances and hearses].
  • Vehicles provided for qualified automobile demonstration use
  • Vehicles provided for product testing and evaluation by an employee outside the employer’s work place

If the employer-provided vehicle does not fall into one of the excluded categories, then the employee is required to report his personal use as a taxable benefit. The value of the availability for personal use may be determined under one of several approaches.

jag346_SWHT

Assessment

Under any of the approaches, the after-tax cost to the employee is substantially less than if the employee used his or her own dollars to purchase the automobile and then deducted a portion of the cost as a business expense.

Conclusion

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How the IRS’s Nonprofit Division Got So Dysfunctional

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The IRS Controversy

By Kim Barker and Justin Elliott

ProPublica, May 17, 2013, 5:14 p.m.

The IRS division responsible for flagging Tea Party groups has long been an agency afterthought, beset by mismanagement, financial constraints and an unwillingness to spell out just what it expects from social welfare nonprofits, former officials and experts say.

The controversy that erupted in the past week, leading to the ousting of the acting Internal Revenue Service commissioner, an investigation by the FBI, and congressional hearings that kicked off Friday, comes against a backdrop of dysfunction brewing for years.

Moves launched in the 1990s were designed to streamline the tax agency and make it more efficient. But they had unintended consequences for the IRS’s Exempt Organizations division.

Checks and balances once in place were taken away. Guidance frequently published by the IRS and closely read by tax lawyers and nonprofits disappeared. Even as political activity by social welfare nonprofits exploded [1] in recent election cycles, repeated requests for the IRS to clarify exactly what was permitted for the secretly funded groups were met, at least publicly, with silence.

All this combined to create an isolated office in Cincinnati, plagued by what an inspector general this week described [2] as “insufficient oversight,” of fewer than 200 low-level employees responsible for reviewing more than 60,000 nonprofit applications a year.

A Major Mistake

In the end, this contributed to what everyone from Republican lawmakers to the president says was a major mistake: The decision by the Ohio unit to flag for further review applications from groups with “Tea Party” and similar labels. This started around March 2010, with little pushback from Washington until the end of June 2011.

“It’s really no surprise that a number of these cases blew up on the IRS,” said Marcus Owens, who ran the Exempt Organizations division from 1990 to 2000. “They had eliminated the trip wires of 25 years.”

Of course, any number of structural fixes wouldn’t stop rogue employees with a partisan ax to grind. No one, including the IRS [3] and the inspector general [4], has presented evidence that political bias was a factor, although congressional and FBI investigators are taking another look.

But what is already clear is that the IRS once had a system in place to review how applications were being handled and to flag potentially problematic ones. The IRS also used to show its hand publicly, by publishing educational articles for agents, issuing many more rulings, and openly flagging which kind of nonprofit applications would get a more thorough review.

All of those checks and balances disappeared in recent years, largely the unforeseen result of an IRS restructuring in 1998, former officials and tax lawyers say.

“Until 2008, we had a dialogue, through various rulings and cases and the participation of various IRS officials at various ABA meetings, as to what is and what is not permissible campaign intervention,” said Gregory Colvin, the co-chair of the American Bar Association subcommittee that dealt with nonprofits, lobbying, and political intervention from 1991 to 2009.

“And there has been absolutely no willingness in the last five years by the IRS to engage in that discussion, at the same time the caseload has exploded at the IRS.”

IRS

Stone Walling

The IRS did not respond to requests for comment on this story.

Social welfare nonprofits, which operate under the 501(c)(4) section of the tax code, have always been a strange hybrid, a catchall category for nonprofits that don’t fall anywhere else. They can lobby. For decades, they have been allowed to advocate for the election or defeat of candidates, as long as that is not their primary purpose. They  also do not have to disclose their donors.

Social welfare nonprofits were only a small part of the exempt division’s work, considered minor when compared with charities. When the groups sought IRS recognition, the agency usually rubber-stamped them. Out of 24,196 applications for social welfare status between 1998 and 2009, the exempt organizations division rejected only 77, according to numbers compiled from annual IRS data books.

Into this loophole came the Supreme Court’s Citizens United decision in January 2010, which changed the campaign-finance game [5] by allowing corporate and union spending on elections.

Sensing an opportunity, some political consultants started creating social welfare nonprofits geared to political purposes. By 2012, more than $320 million in anonymous money poured into federal elections.

A couple of years earlier, beginning in 2010, the Cincinnati workers had flagged applications of tiny Tea Party groups, according to the inspector general, though the groups spent almost no money in federal elections.

Main Question

The main question raised by the audit is how the Cincinnati office and superiors in Washington could have gotten it so wrong. The audit shows no evidence that these workers even looked at records from the Federal Election Commission to vet much larger groups [6] that spent hundreds of thousands and even millions [7] in anonymous money to run election ads.

The IRS Exempt Organizations division, the watchdog for about 1.5 million nonprofits, has always had to deal with controversial groups. For decades, the division periodically listed red flags that would merit an application being sent to the IRS’s Washington, D.C., headquarters for review, said Owens, the former division head.

In the 1970s, that meant flagging all applications for primary and secondary schools in the south facing desegregation. In the 1980s, during the wave of consolidation in the health-care industry, all applications from health-care nonprofits needed to be sent to headquarters. The division’s different field offices had to send these applications up the chain.

“Back then, many more applications came to Washington to be worked — the idea was to have the most sensitive ones come to Washington,” said Paul Streckfus, a former IRS lawyer who screened applications at headquarters in the 1970s and founded the industry publication EO Tax Journal [8] in 1996.

Because this list was public, lawyers and nonprofits knew which cases would automatically be reviewed.

“We had a core of experts in tax law,” recalled Milton Cerny, who worked for the IRS, mainly in Exempt Organizations, from 1960 to 1987. “We had developed a broad group of tax experts to deal with these issues.”

In the 1980s, the division issued many more “revenue rulings” than issued in recent years, said Cerny, then head of the rulings process. These revenue rulings set precedents for the division. Revenue rulings along with regulations are basically the binding IRS rules for nonprofits.

“We would do a revenue ruling, so the public and agents would know,” Cerny said. “Over the years, it apparently was felt that a revenue ruling should only be published at an extraordinary time. So today you’re lucky if you get one a year. Sometimes it’s less than that. It’s amazing to me.”

Other checks and balances had existed too. Not only were certain kinds of applications publicly flagged, there was another mechanism called “post-review,” Owens said. Headquarters in Washington would pull a random sample every month from the different field offices, to see how applications were being reviewed. There was also a surprise “saturation review,” once a year, for each of the offices, where everything from a certain time period needed to be sent to Washington for another look.

So internally, the division had ways, if imperfect, to flag potential problems. It also had ways of letting the public know what exactly agents were looking at and how the division was approaching controversial topics.

For instance, there was the division’s “Continuing Professional Education,” or CPE, technical instruction program. These articles were supposed to be used for training of line agents, collecting and putting out the agency’s best information on a particular topic — on, say, political activity [9] by social welfare nonprofits in 1995.

“People in a group would write up their thoughts: ‘Here’s the law,’” said Beth Kingsley, a Washington lawyer with Harmon, Curran, Spielberg & Eisenberg who’s worked with nonprofits for almost 20 years. “It wasn’t pushing the envelope. It was, ‘This is how we see this issue.’ It told us what the IRS was thinking.”

The system began to change in the mid-1990s. The IRS was having trouble hiring people for low-level positions in field offices like New York or Atlanta — the kinds of workers that typically reviewed applications by nonprofits, Owens said.

In Cincinnati

The answer to this was simple: Cincinnati.

The city had a history of being able to hire people at low federal grades, which in 1995 paid between $19,704 and $38,814 a year — almost the same as those federal grades paid in New York City or Chicago. (Adjusted for inflation, that’s between $30,064 and $59,222 now.)

“That was well below what the prevailing rate was in the New York City area for accountants with training,” Owens said. “We had one accountant who just had gotten out of jail — that’s the sort of people who would show up for jobs. That was really the low point.”

So in 1995, the Exempt Organizations division started to centralize. Instead of field offices evaluating applications for nonprofits in each region, those applications would all be sent to one mailing address, a post-office box in Covington, Ky. Then a central office in Cincinnati would review all the applications.

Almost inadvertently, because people there were willing to work for less than elsewhere, Cincinnati became ground zero for nonprofit applications.

For the time being, the checks remained in place. The criteria for flagged nonprofits were still made public. The Continuing Professional Education text was still made public. Saturation reviews and post reviews were still in place.

But by 1998, after hearings in which Republican Senator Trent Lott accused the IRS of “Gestapo-like” tactics, a new law mandated the agency’s restructuring. In the years that followed, the agency aimed to streamline. For most of the ‘90s, the IRS had more than 100,000 employees. That number would drop every year, to slightly less than 90,000 [10] by 2012.

Change Will Come

Change also came to the Exempt Organizations division.

The IRS tried to remove discretion from lower-level employees around the country by creating rules they had to follow. While the reorganization was designed to centralize power in the agency’s Washington headquarters, it didn’t work out that way.

“The distance between Cincinnati and Washington was such that soon Cincinnati became a power center,” said Streckfus, the former IRS lawyer.

Following reorganization, many highly trained lawyers in Washington who previously handled the most sensitive nonprofit applications were reassigned to focus on special projects, he said.

Owens, who left the IRS in 2000 but stayed in touch with his old division, said the focus on efficiency meant “eliminating those steps deemed unimportant and anachronistic.”

In 2003, the saturation reviews and post reviews ended, and the public list of criteria that would get an application referred to headquarters disappeared, Owens said. Instead, agents in Cincinnati could ask to have cases reviewed, if they wanted. But they didn’t very often.

“No one really knows what kinds of cases are being sent to Washington, if any,” Owens said. “It’s all opaque now. It’s gone dark.”

By the end of 2004, the Continuing Professional Education articles stopped [11].

Recommendations [12] from an ABA task force for IRS guidelines on social welfare nonprofits and politics that same year were met with silence.

Even the IRS’s Political Activities Compliance Initiative, which investigated [13] complaints of charities engaged in politics — primarily churches — closed up shop in early 2009 after less than five years, without any explanation.

Both before and after the changes, the Exempt Organizations division has been a small part of the IRS, which is focused on collecting money and chasing delinquent taxpayers.

US capitol

IRS Employee Count in 2012

Rulings and Agreements, the division that handles applications of all nonprofits, accounted for less than 0.5 percent of all IRS employees in 2012.

Source: IRS Data Books [14], IRS Exempt Organizations Annual Report [15]

Of the 90,000 employees at the agency last year, only 876 worked in the Exempt Organizations’ division, or less than 1 in 1,000 employees.

Of those, 335 worked in the office that actually handles applications of nonprofits.

Most of those — about 300 — worked in Cincinnati, Streckfus estimates. The rest were at headquarters, in Washington D.C.

In Cincinnati, the employees’ primary job was sifting through the applications of nonprofits, making determinations as to whether a nonprofit should be recognized as tax-exempt. In a press release [16] Wednesday, the IRS said fewer than 200 employees were responsible for that work.

In 2012, these employees received 60,780 applications. The bulk of those — 51,748 — were from groups that wanted to be recognized as charities.

But the number of social welfare nonprofit applications spiked from 1,777 in 2011 to 2,774 in 2012. It’s impossible to say how many of those groups indicated whether they would engage in politics, or why the number of applications increased. The IRS said Wednesday that it “has seen an increase in the number of tax-exempt organization applications in which the organization is potentially engaged in political activity,” including both charities and social welfare nonprofits, but didn’t specify any numbers.

Total 501(c)(4) [17] Nonprofit Applications from 2002 to 2012

From 2011 to 2012, applications increased by more than 50 percent.

Source: IRS Data Books [14]

On average, one employee in Cincinnati would be responsible for going through roughly one application per day.

Some would be easy — say, a local soup kitchen. But to evaluate whether a social welfare nonprofit has social welfare as its primary purpose, the agent is supposed to use a “facts and circumstances” test. There is no checklist. Reviewing just one social welfare nonprofit could take days or weeks, to look through a group’s website, track down TV ads and so forth.

“You’ve got 60,000 applications coming through, and it’s hard to do that with the number of agents looking at them,” said Philip Hackney [18], who was in the IRS’s chief counsel office in Washington between 2006 and 2011 but said he wasn’t involved in the Tea Party controversy. “The reality is that they cannot do that, and that’s why you’re seeing them pick stuff out for review. They tried to do that here, and it burned them.”

As we have previously reported, last year the same Cincinnati office sent ProPublica [19] confidential applications from conservative groups. An IRS spokeswoman said the disclosures were inadvertent.

The Commissioner Speaks

Mark Everson, IRS commissioner for four years during the George W. Bush administration, said he believed the fact that the division is understaffed is relevant, but not an excuse for what happened. “The whole service is under-funded,” he pointed out.

And Dan Backer, a lawyer in Washington who represented six of the groups held up because of the Tea Party criteria, said he doesn’t buy the notion that low-level employees in Cincinnati were alone responsible.

“It doesn’t just strain credulity,” Backer said. “It broke credulity and left it laying on the road about a mile back. Clearly these guys were all on the same marching orders.”

The inspector general’s audit was prompted last year after members of Congress, responding to complaints by Tea Party groups, asked for it.

Like former officials interviewed by ProPublica, the audit suggests that officials at IRS headquarters in Washington were unable to manage their subordinates in Cincinnati. When Lois Lerner, the Exempt Organizations division director in Washington, learned [20] in June 2011 about the improper criteria for screening applications, she instructed that they be “immediately revised.”

But just six months later, Cincinnati employees changed [21] the revised criteria to focus on “organizations involved in limiting/expanding government” or “educating on the Constitution.” They did so “without executive approval.”

“The story people are overlooking is: Congress is complaining about underpaid, overworked employees who are not adequately trained,” said Bryan Camp, a former attorney in the IRS chief counsel’s office.

Assessment

In the end, after all the millions of anonymous money spent by some groups to elect candidates in 2012, after all [22] the groups [23] that said in their applications that they would not spend money to elect candidates before doing exactly that, after the Cincinnati office flagged conservative groups, the IRS approved almost all the new applications. Only eight applications were denied.

Source: http://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional

Conclusion

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Deducting Un-Reimbursed Professional Expenses

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Tax expenses must be”ordinary” and “necessary”

By Andrew D. Schwartz CPA http://www.schwartzaccountants.com

Andrew SchwartzAccording to the IRS, to be deductible, the expenditure must be both “ordinary” and “necessary” in connection with your medical profession or specialty.

The Definition

The IRS defines “ordinary” as common and accepted in a particular profession and “necessary” as helpful and appropriate for a particular profession.

The List

Here’s a list of 16 professional expenditures commonly incurred by young or mature health care professionals:

  • Automobile expenses
  • Beepers and pagers
  • Books/library
  • Cellular telephones
  • Computer purchases
  • Education, examinations & licenses
  • Equipment & instruments
  • Job search
  • Malpractice insurance
  • Meals & entertainment
  • Parking & tolls
  •  Professional dues, journals & subscriptions
  • Psychoanalysis as part of training
  • Supplies
  • Travel & lodging
  • Uniforms & cleaning

Assessment

Please note: Employees, like hospitalists, may not deduct professional expenses that are eligible for reimbursement from their employer.

Conclusion

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Change in Distribution of Income Among Tax Filers 1996-2006

A Congressional Research Services White Paper

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As tax season draws near, here is an important essay from CRS, by:

Thomas L. Hungerford

[Specialist in Public Finance]

Assessment

Link: http://taxprof.typepad.com/files/crs-1.pdf

Conclusion       

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Financial Planning and Risk Management Strategies for Physicians

Financial Planning Handbook for Physicians and Advisors

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Remember Tax Deadline Day is April 18th 2011

Tax Emancipation Day is April 15th 2011

By Dr. Gary L. Bode MSA, CPA, PC

In the 2011 tax filing season, taxpayers have until Monday, April 18 to file their 2010 tax returns and pay any tax due. Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15. By law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have three extra days to file this year. Taxpayers requesting an extension will have until October 17 to file their 2010 tax returns.

Who Must Wait to File

For most taxpayers, the 2011 tax filing season starts on schedule. However, tax law changes enacted by Congress and signed by President Obama in December mean some people need to wait until mid to late February to file their tax returns in order to give the IRS time to reprogram its processing systems. The IRS recently announced February 14, 2011 as the start date for processing these delayed tax returns.

Some taxpayers, including those who itemize deductions on Form 1040 Schedule A, will need to wait until February 14, 2011 to file. This includes taxpayers impacted by any of three tax provisions that expired at the end of 2009 and were renewed by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 enacted December 17, 2010. Those who need to wait to file include:

  • Taxpayers Claiming Itemized Deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, and medical and dental expenses as well as state and local taxes. In addition, itemized deductions include the state and local general sales tax deduction that was also extended and that primarily benefits people living in areas without state and local income taxes.
  • Taxpayers Claiming the Higher Education Tuition and Fees Deduction. This deduction for parents and students, covering up to $4,000 of tuition and fees paid to a post-secondary institution, is claimed on Form 8917. However, the IRS emphasized that there will be no delays for millions of parents and students who claim other education credits, including the American Opportunity Tax Credit extended last month and the Lifetime Learning Credit.
  • Taxpayers Claiming the Educator Expense Deduction. This deduction is for kindergarten through grade 12 educators with out-of-pocket classroom expenses of up to $250. The educator expense deduction is claimed on Form 1040, Line 23 and Form 1040A, Line 16.

Assessment

In addition to extending those tax deductions for 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act also extended those deductions for 2011 and a number of other tax deductions and credits for 2011 and 2012, such as the American Opportunity Tax Credit and the modified Child Tax Credit. The Act also provides various job creation and investment incentives, including 100% expensing and a 2% payroll tax reduction for 2011. Those changes have no effect on the 2011 filing season.

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Conclusion

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On the Proposed Tax Cuts

Senate Debate on Extending 2001/2003 Tax Cuts

By Children’s Home Society of Florida Foundation

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The Senate Finance Committee conducted a hearing on July 14, 2010 to discuss the potential extension of tax cuts. In the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), there were tax reductions for nearly all Americans. The tax reductions continue through 2010, but are set to be repealed on January 1, 2011.

Proposals

The White House has proposed to extend these tax cuts for single persons with incomes under $200,000 ($250,000 for couples), but to increase the capital gain rate and top income tax brackets. Under the White House plan, the capital gain rate will increase from 15% to 20%, the 33% bracket increases to 36% and the 35% tax bracket is raised to 39.6%.

[picapp align=”none” wrap=”false” link=”term=income+tax&iid=238905″ src=”http://view1.picapp.com/pictures.photo/image/238905/thinkstock-single-image/thinkstock-single-image.jpg?size=500&imageId=238905″ width=”337″ height=”506″ /]

The Senate

Senate Finance Chair Max Baucus (D-MT) opened the hearing by stating, “Americans are struggling to make ends meet, and we need to do all we can to put more money back in the hands of workers, middle-class families and small businesses so our economy can grow. I support extending the middle-class tax cuts permanently, as soon as possible, so working families can keep more of their hard-earned money.”

Sen. Baucus and the White House are both advocating a permanent extension of the tax cuts for low and middle-income taxpayers, with an increase in taxes for those in the upper brackets.

Ranking Member on the Senate Finance Committee Charles Grassley (R-IA) has repeatedly expressed concern about the increase of taxes on small business owners. He noted, “To those who are pushing the higher marginal rates, I say the burden is on you to show that you are not harming our primary job creators.” Sen. Grassley has noted that two-thirds of new jobs in the past decade have been created by the small business owners who will be subject to the higher taxes.

Editor’s Note: The hearings on taxes are the first step in creation of a tax bill. Because the failure to act this year would result in repeal of all of the tax cuts, it is probable that there will be a tax bill prior to the end of 2010. However, with the shortened legislative calendar due to the fall elections, the tax bill is quite likely to be deferred until after the election.

Conclusion

Douglas Holtz-Eakin is President of the American Action Forum and was formerly the Congressional Budget Office Director. He testified that approximately one-half of the $1 trillion in business income that will be reported in 2011 will be subject to the higher 36% and 39.6% tax brackets. In his opinion these higher rates will reduce the willingness of small businesses to hire new employees.

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Tax Efficient Investing

Friends and ME-P Readers,

By Sean G. Todd; Esq, M.Tax, CPA, CFP®

Summer is here for sure in Atlanta—90 degrees plus day after day. I’ve been enjoying the fresh sweet corn, a BLT and a large glass of sweet tea at dinner—now that is a fine meal. Why do I share this with you — because at mid-year, I think from time to time we have to step back from all that we are involved in, concerned with, and what we think is important to actually appreciate all that we have and not overlook the small things. Which brings me to the topic of this Medical Executive-Post and not overlooking the small things—like taxes. As a physician-investor, you have to keep an eye on the impact taxes have on your investment portfolio because it is what you keep after taxes that counts.

Of the Markets

During my last post—I indicated that I was not sure if the recent reprieve in the markets was sustainable. And, we did experience a mild reversal recently. But, did you know that doing nothing is actually doing something? I’m pretty certain that the past investment strategies are not going to work going forward and I share these with ME-P readers as to why I believe this is true; and how best to position your portfolio going forward. Other professionals agree—the rules have changed — have you changed anything? Let’s move on to the real reason you continue to read our posts: To be able to make the right long-term decision during these difficult times. In this post we need to focus on the importance of tax-efficient investing.  We are confident that you and your friends and colleagues whom you choose to share this ME-P will benefit from the information discussed, as well.

Why Tax Efficient Investing is Important

Physicians and all investors have experienced some turbulent times over the last 12 months and it appears more rough waters lie ahead. As a physician-investor, you are unable to control the markets but there are certainly things you can control and should. One of these is taxes. Given the level of government spending, additional tax revenues will be needed which equates to higher taxes. You cannot plan your taxes on April 15th but you have to implement a tax strategy plan during the year so you can capture the benefit on April 15th. With increased taxes on the horizon, tax-efficient investment is going to be more important than ever. Brokers or the 1-800 do-it-yourself brokerage firms are not licensed to give you tax advice, but CPAs and EAs, are. The old saying goes, “It’s not what you make, but what you keep after taxes that counts”. This statement will become even more important going forward.

Returns Lost to Taxes

Have you thought of the impact on your portfolio that taxes have on your investment returns? Good financial advisors should as these are still some of the most important decisions you face as an investor.

Take for example a physician-investor in the top tax bracket earned an average return of 15% on actively managed mutual funds in a taxable account from 1981 to 2001. After taxes, average return dwindled to roughly 12% – which means our investor lost an average of 2.4% in return to taxes (the numbers reflect a compound rate of return). Investment return lost to taxes don’t just affect mutual fund investors — you have to look at your entire holdings in your taxable accounts and how you manage your investments, because, investors in individual stocks and bonds are vulnerable too. Like I indicated, you do have a lot of control over your taxes and should actively control them given the significant impact on your total investment return. Something for consideration: Diversification and asset allocation are great tools for helping to reduce portfolio volatility, but we’re still going to be subject to the short-term whims of the market, no matter how diligent we might be in setting up our portfolios and selecting our individual investments. One of the areas that we have the greatest degree of control is the area of tax-efficient implementations. Doesn’t it make sense that where we can exercise the most control, we do so?

Tax-Efficient Investing is More Important than Ever

Work with me here. If we assume that over the next 20 years annual compound returns for the broad stock market average between 8% and 10%, and bonds average about half that, then average portfolio returns would be less than what we enjoyed over the last 20 years. What this actually means is that any return lost to taxes will be a much bigger deal. In other words, losing 2.4% per year to taxes may not have seemed like much if you were making 15-20% annual returns. But if you only expect to make 9% on your investments, keeping as much of that return as possible, can be vital to achieving your long-term goals. The real impact– 2.4% tax impact will cause you to lose 26% of your 9% gain. Thinking you got a 9% gain but your real after-tax gain is only 6.6%. This is a big annual difference and a significant compound difference.

The second reason tax efficiency is more important than ever is because of the changes to the tax rules in 2003. A notable provision: the 15% tax rate on qualified dividend income. Often a missed opportunity! Previously it might have made sense to hold dividend-paying stocks in a tax-deferred account such as an IRA instead of a taxable account. Either way, dividends were taxed at your ordinary income tax rate between 28% and 39.6% prior to 2001. The thought was the IRA offered tax-deferred potential growth.

Currently, qualified dividends in a taxable account are taxed at a maximum rate of 15%. Those save dividends would be taxed at the ordinary rate—currently as high as 35% when withdrawn from your tax-deferred account. As a result, the value of putting dividend-paying stocks in taxable accounts has grown significantly.

What Investments Go Where?

I need to speak in general terms here, investment that tend to lose less of their return to income taxes are good selections to go into taxable accounts. With that said the opposite should be true: Investments that lose more of their return to taxes could go into tax-deferred accounts. Here’s where tax-smart investors might want to place their investments.

Taxable Accounts Tax-Deferred accounts – Traditional IRAs, 401(k)s and deferred annuities
Ideally place…
Individual Stocks you plan to hold more than one year Individual stocks you plan to hold one year or less
Tax-managed stock funds, index funds, low turnover stock funds Actively managed funds that generate significant short-term capital gains
Stocks or mutual funds that pay qualified dividends Taxable bond funds, zero-coupon bonds, inflation protected bonds or high yield bond funds
Municipal bonds, I bonds Reits

DISCLOSURE: This assumes you hold investments in both types of accounts. A different set of rules would apply if you held all your investments in a taxable account or a tax-deferred account.

In general, holding tax-efficient investment in taxable account and less tax-efficient investment in tax-advantaged account should add value over time. It appears that the above serves as a simple set of guidelines to go by but there are additional considerations before making the above allocation.

Additional Considerations

Reallocation of your Portfolio

To maintain your strategic asset allocation will cause additional tax drag on return, to the extent you rebalance in taxable accounts. You may want to focus on your rebalancing efforts on your tax-advantaged accounts, including your taxable accounts only when necessary. Keep in mind, adding new money to underweighted asset classes in also a tax-efficient way to help keep your portfolio allocation in balance.

Active Trading

Active trading by individuals or by mutual funds, when successful tends to be less tax efficient and better suited for tax-advantaged accounts. A caveat: Realized losses in your tax-advantaged accounts cannot be recognized to offset realized gains on your tax return.

Liquidity Preference

If an investor wanted liquidity, then they might be holding bonds in their taxable accounts, even if it makes more sense to form a tax perspective to hold them in tax advantaged accounts. In other situations, it may be impractical to implement all of your portfolio’s fixed income allocation using taxable bonds in tax-advantaged accounts. If so, compare the after-tax return on taxable bonds to the tax-exempt return on municipal bonds to see which makes the most sense on an after-tax basis.

Estate Planning Issues

One cannot overlook the estate planning issues in deciding which account will hold a given type of investment. Also, what is the philanthropic intent of the doctor or investor? Stocks held in taxable accounts receive a step-up in cost basis at death (something heirs greatly appreciate) which is not the same for tax-advantaged accounts. Additionally, highly appreciated stocks held in taxable accounts more than a year might be well-suited for charitable giving.

Roth IRA

This type of account might just be an exception to all of the above. The rules are different when investors involve a Roth IRA. Since qualified distributions are tax free, assets you believe will have the greatest potential for higher return are best placed inside a Roth IRA, when possible.

Conclusion

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Meet Dr. Gary L. Bode CPA MSA CMP™ [Hon]

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Introducing our Newest Thought-Leader

Dr. Gary Bode; CPA, MSA, CMP

[By Ann Miller RN MHA]

The Medical Executive-Post is proud to introduce Dr. Gary L. Bode as our newest thought-leader for healthcare financial modernity. Dr. Bode was the Chief Financial Officer [CFO] for a private mental healthcare facility, and previously the Chief Executive Officer [CEO] of Comprehensive Practice Accounting, Inc, in Wilmington, NC. The firm specialized in providing tax solution to medical professionals. Dr. Bode was a board certified practitioner and managing partner of a multi-office medical group practice for a decade before earning his Master’s of Science degree in Accounting [MSA] from the University of North Carolina. He is a nationally known forensic health accountant, financial author, educator and speaker.

A Multi-Faceted Healthcare Financial Expert

Areas of expertise include producing customized managerial accounting reports, practice appraisals and valuations, restructurings and innovative financial accounting, as well as proactive tax positioning and tax return preparation for healthcare facilities. Currently, Dr. Bode is Chief Accounting and Valuation Officer (CAVO) for the Institute of Medical Business Advisors, Inc. He is also a Certified Medical Planner™ http://www.CertifiedMedicalPlanner.org  He provides litigation support in his areas of expertise and has been previously accepted as a legal expert witness www.MedicalBusinessAdvisors.com

Assessment

Gary has promised to publish his most exciting ideas and innovative work on our blog. He is also available for private consulting engagements and related professional work on an ad-hoc, or interim basis. So, let’s give a warm ME-P “shout-out” to Dr. Gary L Bode; our newest thought-leader.   

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Conclusion

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Tax Tips for Under or Unemployed Medical Professionals

Status Still Possible for Physicians and Nurses

By Sean G. Todd, Esq., M. Tax, CFP©, CPA

Tax Attorney

Certified Public Accountant
Certified Financial Planner™ practitioner

Terminated, reduced-in-force, or out of work in 2009? As the April 15th tax deadline approaches, medical professionals and all other under/unemployed folks might have questions regarding their tax returns – unchartered waters for many. More people than ever before may be experiencing the effects of losing their jobs for the first time, or receiving unemployment benefits, and are uncertain about the tax consequences that relate to all this. So, in these difficult times, give some consideration to working with a professional to help you make the right decisions.   

Labor Department Reports

The US Labor Department report issued on February 6, 2009 showed that nearly 2.6 million jobs were lost over the course of 2008, the highest yearly job loss total since 1945. The official unemployment rate is at 7.2%, a 16 year high, according to the labor department. For your assistance, I’ve prepared some of the most common questions along with the answers. Here are several questions and answers to help you through this stressful time.

1. Do I have to still pay my taxes if I was out of work in 2008?

More likely than not! The IRS requires anyone who received a W-2 from their employer and made at least $8,950 (if you’re single and under 65 years old), or made at least $400 if you’re self employed, to file a tax return. These are the baseline cutoff numbers. If you’re anticipating a tax refund, you must file – even if you didn’t work at all. The IRS will not just send you a refund – you must file and claim your refund. Despite being unemployed, you still are required to file your taxes – often times a new level of frustration begins during this already confusing and frustrating time.    

2. Will I have a tax liability? 

It depends. It depends on a variety of factors since every taxpayer’s tax situation is unique, based on the facts and circumstances of the taxpayer. Some factors may impact a person’s filing requirement such as: if you only had unemployment compensation throughout the year, you may owe some tax on the checks you received. A severance package could also give you a tax bill, as could dividends and interest from investment income. Other factors which also need to be considered would include tax deductions and other life changes as a result of being unemployed: out-of-pocket medical expenses; sale of your home as a result of downsizing or even independent contractor income you might have received.

3. Do I have to include my unemployment checks in taxable income?

In a word, yes. Unemployment compensation is included as taxable income for federal purposes and most state tax returns. When applying for unemployment, we recommend that you elect tax withholding. You can choose whether you want federal and/or state income taxes automatically taken out of your unemployment benefits. If you choose to withhold, federal income taxes are withheld at a 10% rate, while the state rate varies. But since many cash-strapped Americans opt not to withhold – come April they may have to pay up during an already stressful time when extra cash is often times not available. So if you are not electing any tax withholding, a tax bill may be an unwelcome surprise when you file your 2008 return.

4. What if I “took” money from my 401(k)?

The answer depends on the definition of “took”. If you took a loan from your 401(k), exclude this from taxable income. You may owe taxes if you took money out of a retirement plan or 401(k) to supplement your unemployment checks. That counts as income and is taxable too. The taxes are in addition to a 10% penalty on early withdrawals if you’re below the age of 59-1/2. A special election is available to many taxpayers to avoid this 10% penalty on early withdrawals which many do not know about – costing even more in taxes. 

5. What if I did some supplemental work as an independent contractor?

In the attempt to continue to earn an income after being unemployed, you might have done some freelance or project work. Being unemployed allowed you the flexibility to become self-employed. That is the positive side of things – you earned income. Here is the negative side: if you earned some income doing odd jobs or consulting services while unemployed, you’re subject to income tax AND self-employment tax on that income. To report that supplemental work, taxpayers must include a Schedule C with their income tax return, which details the income and expenses for the year. This is where we see a lot of errors – individuals do not prepare schedule C for this type of earnings. If you earned over $30,000 and are now unemployed – you may go to www.lostmyjobtaxprep.com for an exclusive offer.  If you earned more than $600 during one of the projects, expect to receive tax form 1099 and you must include that as taxable income on your income tax return. Also note that if you made less than $600, then you will not be issued a 1099 but are still required to report this income as well on your tax return.

6. Relocated for the new job?

If the new job required you to relocate for the position, you may be able to deduct the moving expenses not reimbursed by your new employer. But there’s a distance test you must meet to qualify for the deduction. The new job site has to be 50 miles further than the distance from your old residence was from the old job, according to Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants [AICPA]. This basically prevents you from trying to deduct a move within the same metropolitan area.

7. Are my job search expenses deductible?

Those who were on the job hunt last year can utilize the tax code to their benefit and qualify for a larger refund. There are a slew of tax deductions available. In fact, many of the expenses incurred while looking for a job can be deducted, which can result in some serious tax savings.

Tax Checklists

As readers and subscribers to the Medical Executive-Post are aware, there is a quality initiative in clinical medicine that promotes the use of checklists. So, here is a good, but partial list of those things you need to keep track of:

  • Anything you spend on creating, printing and mailing your resume is deductible.
  • Anything you spend on a career coach or headhunter.
    Any long distance, cell or fax charges directly associated with your job search.
  • Transportation costs such as a bus, taxi, train or plane to an interview is deductible.
  • Mileage costs accrued when you drive to interviews and even to the unemployment office. [Between Jan. 1, 2008, and June 30, 2008, taxpayers can claim 50.5 cents per mile, between July 1, 2008 and Dec. 31 2008 taxpayers can claim 58.5 cents per mile].
  • All job related parking fees and tolls; and,
  • All meals and lodging if the interview was out of town.

Link: https://healthcarefinancials.wordpress.com/2009/01/20/a-homer-simpson-moment-of-clarity-on-medical-quality

Further Explanations

You cannot deduct the cost of the “new interview suit” as it does not qualify as a uniform. Also forget about deducting the value of your time as the IRS deems it to be worthless for tax deduction purposes. So too, forget about deducting your new Coach “briefcase” and matching “interview” shoes – they too are disallowed.  It’s the responsibility of each taxpayer to keep receipts related to any of these expenses in order to substantiate them when filing. In a self-serving interest, we always recommend consulting a professional tax preparer for help.  

Two New Websites

There are two websites especially beneficial for individuals who have lost their jobs and are concerned about protecting their 401(k) account. Individuals who are still employed can benefit from the information provided on the site as well.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated.

Speaker:If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com 

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