Summer barbecues, boats and beaches should not distract you from the business of your taxes. Throughout the year, you take your car in to the mechanic for maintenance – so too should you chat periodically with your financial professionals to be sure you are not missing any individual or business opportunities to minimize your taxes by December 31st. The end of Summer is a perfect time for a mid-year review of your tax return which can reveal money saving ideas and leave you plenty of time to implement new financial plans.
Here are some events that can significantly impact your tax liability:
- Change in employment, ie., from private practice to clinical, educational, research or hospital based career;
- Marriage or divorce;
- Death of a spouse;
- Spouse starts to work;
- Birth of a child or adoption;
- Substantial increases or decreases in income;
- Large gains from the sale of assets, stocks or bonds;
- Buying or selling of property or rental property;
- Starting a practice, acquisition or sale of a practice;
- Purchases of medical equipment or other property;
- Buying, selling, or re-financing a domicile or vacation home;
- Receiving an inheritance;
- Substantial investment income or gains from the sale of investment assets;
- Imminent retirement or reaching age 70 ½; and
- Unplanned withdrawals from an IRA or pension plan.
On your checklist of things to consider should be:
- Are you able to take advantage of the 20% of qualified business income (QBI) deduction? Physicians can benefit from the 199A Deduction if their taxable income is below $157,500 for single filers and $315,000 for joint filers. Proper tax planning and restructuring alternatives can help your eligibility.
- What does your balance sheet look like? Is your practice’s financial plan on budget, are you managing cash flow, are you feeling the impact of income gains or projecting losses?
- Starting a 401(k) or similar retirement plan like a SEP for your practice.
- Review withholding and estimated tax payments to avoid paying too much or too little. Two-income families may be more vulnerable to being under-withheld or over-withheld.
- If your income is approaching the net investment income tax (NIIT) threshold consider strategies to defer earned income or shift some of your income-generating investments to tax-advantaged retirement accounts.
- Have you considered bunching charitable contributions?
CONTACT US: Don’t procrastinate! Life altering events and changes in both your practice and personal circumstances can impact your taxes, don’t wait until tax time 2019 to see the results. With mid-year tax planning, you may be able to mitigate the tax impact of certain events and avoid unpleasant surprises before it is too late, as well as decrease your prepayments and obtain more cash flow. Call toll free to set up a consultation with one of our tax and financial professionals: 855-534-2727.