Physicians: Get Ready for the New Tax Year with These Hot Tips
Provided by Eric Kala CFP®, CIMA®, AEP®, CLU®, ChFC®, CRPS®
The end of the tax year looms, and while many of us dont file our taxes until March, closing out the year is vital. Now is the time, as early as it may seem, to make sure that you are meeting your financial and tax planning goals for the year.
Here are some tips:
- Pay attention to the news. Attempts to repeal the Affordable Care Act have failed and it looks like those tax surcharges will remain in place for now. Tax reform is unlikely to affect you for 2017, but it may well affect your tax bills and planning for 2018. Tax reform may affect your ability to claim various deductions. Speak with your tax advisor regarding some of the options being considered, and what effect, if any, these deductions would have on any estimated taxes that you are paying.
- At the end of the year, consider deferring income. This is a juggling act. If you can avoid a higher tax bracket, do so, but if it looks like youll come in well under this year, but might go over next year, then consider trying to bring in more money now.
- Do an audit with a tax professional now. What is your projected tax bill? If you have shareholders, are you on track to meet your promises to them? If not, you might want to try to add more doctor days. How are your bank and student loan repayments looking? How much income do you need to put back into the practice for equipment and facilities improvement?
- Estimate the value of your practice as it will be at the end of the year. This will allow you to plan better for the coming year, without rushing plans in January after getting your accountants report. January is often a busy time for physicians as it is the height of the flu season.
- Consider spending down profitsagain, to potentially reduce your tax bill. Now is a great time to see if you can spend any of your profit on equipment, facility maintenance, stocking up on supplies, etc. You may even be able to pre-pay some rent. If you are planning on attending a conference, buy tickets now rather than early next year when you have less of an idea of what you will be making.
- Also, be wary of trust scams. Physicians are often targeted with complex trust opportunities that claim to save a ton of money on taxes, but may be more hassle than they are worth and at worst, may be a legal liability. Never put money into a trust without consulting your financial team.
Following these tips will help you and your practice efficiently manage your tax liability and improve your overall financial planning. Now is the time to talk to your tax accountant or legal advisor about your end of year taxes.
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