Tax Saving Strategies for Doctors
Almost all doctors know that we think they pay too much taxes. Most of them are right. This arises mainly from not understanding how the tax code works. Doctors accept that reducing the tax burden is a function of getting the right accountant to prepare their taxes when it really is a changing function in the way they live their financial lives. These five changes in your financial life that you can make this year will reduce your tax burden. So now will talk about tax saving strategies for doctors. Print this out for your reference later.
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1: Save more and do it in deferred tax withdrawal accounts
Most doctors have at least one tax withdrawal account. It can be 401 (k), 403 (b), 457 (b), 401 (a), 401 (k) individual, SEP-IRA, Simple IRA, profit sharing plan or value for money plan. However, your possible contributions to maximize these accounts are surprising. Many doctors do not know that they can have multiple 401 (k) s if they have multiple employers. These accounts are the best tax exemption available. Not only do you get a great discount on this year’s tax bill, but the money grows in a tax-protected manner, and if you are like most doctors, you will transfer the money at a marginal tax rate. Less than the contribution made. Basically, you get a tax exemption AND you get the money to keep.
2: Use of health savings accounts
A health savings account (HSA) is even better. Not only does he get the same tax exemption for the same contribution and tax protection growth, but while he spends money on medical care, he doesn’t pay taxes on the money when he leaves. HSA is your only “tax free” account. It also acts as a “Stealth” IRA. If you do not spend the money on medical care, you can release it after age 65. In that case, you must pay taxes, but these are not your deferred tax retirement accounts. If you are self-employed, your health insurance premiums are also tax deductible.
IRA contributions do not reduce your tax bill in the year you make them, but your earnings are not taxed again. Many doctors stop making IR IRA contributions after residency because their income prevents them from contributing directly to them. However, they are allowed to make contributions “through the background”. This is done by contributing to a traditional IRA (this contribution is not deductible due to the high income of the doctor) and then converts the traditional IRA into an IRA Wheel.
4: Harvest for loss of taxes
Many investors hate selling investments after having reduced the value. However, there is almost no reason to lose investment in a taxable account. However, you don’t want to sell “low” and give up a good investment because its value was temporary. This allows you to have the same position invested and achieve a loss that you can use in your taxes.
Not only can you use these losses to avoid capital gains taxes, but you can also use up to $ 3,000 of these losses to reduce your regular income each year. If you cannot use the total loss this year, you can charge it indefinitely. When you finally sell this investment, you will have a lower base (and if you need more taxes), but this can be eliminated using actions that are valued for charitable donations or take advantage of the death graduation base they never sell.
5: Use money in ways approved by the IRS
If you read the tax code carefully, you will see that the IRS subsidizes your lifestyle by aligning it with the IRS values. For example, the IRS grants subsidies to homeowners (taxes are deductible property), donors (deductible charitable contributions), borrowers (mortgage interest, margin interest and even student loan interest may be deductible) and business owners (nothing justifiable since the cost of the business is not deductible). It’s not like “free lunch” because you always spend more than you recover on your taxes, but at least the tax code will reduce the cost of these purchases.
Before you go, I hope this article tax saving strategies for doctors is helpful for you.