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 don’t 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 you’ll 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 accountant’s report. January is often a busy time for physicians as it is the height of the flu season.
- Consider spending down profits–again, 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.
Avid Wealth Partners is a marketing name for Eric Ilmari Kala in their capacity as a representative of Northwestern Mutual and is not a legal business name. Eric Ilmari Kala is a representative for Northwestern Mutual Wealth Management Company®, Milwaukee, Wisconsin (NMWMC) (fiduciary and fee-based financial planning services), a subsidiary of Northwestern Mutual Life Insurance Company Milwaukee, Wisconsin (NM) (life and disability insurance, annuities and life insurance with long-term care benefits) and federal savings bank. All NMWMC programs and services are offered only by representatives operating from agency offices of NMWMC. Eric Ilmari Kala is an insurance agent of NM and Northwestern Long Term Care Insurance Company, Milwaukee, Wisconsin (long-term care insurance), a subsidiary of NM, and a Registered Representative of Northwestern Mutual Investment Services, LLC (securities), a subsidy of NM, broker-dealer, registered investment adviser, and member FINRA and SIPC.
Avid Wealth Partners
17802 W Interstate 10, Ste. 114, San Antonio, TX 78257
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ CFP® (with plaque design) and CFP® (with flame design) in the United States, which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
This publication is not intended as legal or tax advice, should not be used as a basis for legal or tax advice, and is not intended to be used and cannot be used to avoid any penalties that may be imposed on a taxpayer. Financial representatives do not give legal or tax advice. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.