Tax Planning

Tax Deductible Business Related Expenses for Physicians

• Accounting and Tax Preparation Fees
• Board Fees and Board Review Courses
• Business Gifts (limited to $25 per gift per person)
• Cell Phone and Mobile Apps
• Cleaning/Laundry of Medical Uniforms
• Computers and Related Supplies
• Continuing Medical Education (CME)
• Conferences and Conventions
• Dues to Medical Associations
• Legal and Professional Fees
• Malpractice Insurance
• Medical Books and Journals 
• Medical Equipment and Supplies
• Medical License and DEA Fees  
• Medical Uniforms 
• Telephone/Fax/Internet Access 
• Auto Expenses
  • Standard Mileage Rate - 53.5¢ per business mile for 2017
  • Auto Lease Payments
  • Car Washes & Detailing
  • Gas & Oil
  • Insurance
  • Repairs & Maintenance
  • Registration
  • Tires
• Meals and Entertainment
  • 50% Deductible when business related
  • 50% Deductible when away on over-night travel
• Travel
  • At least 24 hours away from home
  • Transportation and lodging expenses related to business are 100% tax deductible

Student Loan Interest Deduction

• Individuals may deduct up to $2,500 of interest paid in the current year on student loans 
• Student loan interest is deducted as an Adjustment to Income on Form 1040
• Voluntary interest payments are tax-deductible
• Limited to the first 60 months for which interest payments were required
• Phase-out (Adjusted Gross Income - AGI)
  • Single    Taxpayer $ 65,000 - $80,000
  • Married Taxpayer $130,000 - $160,000

Temporary Living Expenses while away for Fellowship Training

• Temporary Living must be less than 365 days
• Expenses Allowed:
  • Transportation
  • Rent
  • Utilities
  • Auto Expenses
  • Groceries
  • Meals and Entertainment

Personal (Federal) Income Taxes

• Income Tax Rates for 2017:
  
  

  	10%	15%	25%	28%	33%	35%	39.6%
  Married Filing Jointly	0 - $18,650	$18,650 - $75,900	$75,900 - $153,100	$153,100 - $233,350	$233,350 - $416,700	$416,700 - $470,700	Over $470,700
  Married Filing Separately	0 - $9,325	$9,325 - $37,950	$37,950 - $76,550	$76,550 - $116,675	$116,675 - $208,350	$208,350 -  $235,350	Over $235,350
  Head of Household	0 - $13,350	$13,350 - $50,800	$50,800 - $131,200	$131,200 - $212,500	$212,500 - $416,700	$416,700 - $444,550	Over $444,550
  Single	0 - $9,325	$9,325 - $37,950	$37,950 - $91,900	$91,900 - $191,650	$191,650 - $416,700	$416,700 - $418,400	Over $418,400

• Standard Deduction and Personal Exemption Phaseout (Personal Exemption for 2017 is $4,050)
  
  

  	Standard Deduction	Beginning of Personal Exemption Phaseout
  Married Filing Jointly	$12,700	$313,800
  Married Filing Separately	$6,350	$156,900
  Head of Household	$9,350	$287,650
  Single	$6,350	$261,500

• The American Taxpayer Relief Act of 2012 added a 3% limitation for itemized deductions claimed on 2017 tax returns of individuals with incomes of $261,500 or more ($313,800 for married couples filing jointly)
  
  
• Itemized Deductions include:
  • Medical and dental expenses (subject to 10% of AGI limitation)
  • State and local income taxes
  • Real estate taxes
  • Auto license tax
  • Home mortgage interest, including points
  • Charitable contributions - cash and noncash
  • Unreimbursed employee expenses (subject to 2% of AGI limitation) - see list above
  • Miscellaneous expenses (subject to 2% of AGI limitation) - tax preparation fees, safe deposit box, investment expenses, etc.
• Adjustments to Income include:
  • Individual Retirement Account (IRA) contributions
  • Student loan interest
  • Moving expenses
  • One-half self-employment tax
  • Self-employed health insurance
  • SEP IRA contributions
  • Alimony paid

FICA Taxes

FICA 6.20% OASDI tax is computed on the first $127,200 of 2017 income. The 1.45% Medicare tax is computed on total wages, without a ceiling. Starting in 2013, there will be an additional 0.9% Medicare tax on wages above $200,000 for individuals and $250,000 for married filing jointly.

Also starting in 2013, there is a new Medicare tax of 3.8% on investment (unearned) income for single taxpayers with modified adjusted gross income (MAGI) over $200,000 ($250,000 joint filers). Investment income includes dividends, interest, rent, royalties, gains from the disposition of property, and certain passive activity income. Estates, trusts, and self-employed individuals are all liable for the new tax.

Traditional IRA Deductibility Phase Out Ranges for 2017 (if covered by a retirement plan at work)

Record Keeping

• Set up a filing system
• Consider using a designated credit card for only business related expenses. Request an annual summary statement each year.
• Digitize documents whenever possible, i.e. bank and investment statements, credit card statements, etc.
• Shred documents you don’t need
• Maintain financial records for seven years
• Maintain a mileage log or mobile app to keep track of moonlighting activities, business meals and travel, automobile mileage, etc.
• Meals and Entertainment - document business purpose and relationship of parties for all transactions
• Consider setting up a separate checking account for business purchases and expenses  

Independent Contractor Status

• No taxes are withheld by employer
• Net income is subject to self-employment tax of 15.3%
• Contractor may be required to make quarterly estimated tax payments:
  • 1st Quarter - April 17, 2017
  • 2nd Quarter - June 15, 2017
  • 3rd Quarter - September 15, 2017
  • 4th Quarter - January 18, 2018

Note: It may make sense to pay your 4th quarter State estimated tax payment by December 31st so that it may be tax deductible in the current year instead of the following year. Please consult with a CPA as there may be Alternative Minimum Tax (AMT) implications.

Coverdell Education Savings Accounts

• Maximum $2,000 per year contribution per child
• Contributions are not tax-deductible
• Account growth is tax-free
• Account must be used for higher education purposes by age 30
• Phase-out (Adjusted Gross Income - AGI)
  
  
  • Single    Taxpayer $  95,000 - $110,000
  • Married Taxpayer $190,000 - $220,000

Limitations and restrictions apply. Tax rules are subject to change. This is for informational purposes only. Individual situations will vary. Please speak with a qualified tax advisor for information specific to your situation.